Bitcoin ETFs unlock $30 trillion wealth management market potential
With the introduction of Bitcoin Exchange-Traded Funds in the U.S. public markets, a new avenue has opened for major financial managers to invest in the leading digital currency. This development could signal a significant shift for the $30 trillion wealth management industry, as projections from Standard Chartered suggest potential fund inflows of $50 billion to $100 billion in 2024.
Pomp Investments founder Anthony Pompliano highlights the growing relevance of Bitcoin for younger investors. He sees it as a necessary addition to asset allocations in an attempt to match or surpass benchmark performances.
The price of Bitcoin witnessed a substantial rise to $49,000, a peak since December 2021, before settling around $43,000. This follows a 150 percent increase following a harsh sell-off in 2022. Despite the rally in 2023, many in the investment sector, including fiduciaries and financial advisors, previously missed out due to regulatory caution.
The landscape changed with the Securities and Exchange Commission’s (SEC) approval of spot Bitcoin ETFs. This move allows investors to access Bitcoin similarly to how they would stock and bond index funds. While SEC Chair Gary Gensler maintains a cautious stance on crypto investments, the market is responding actively.
Flourishing institutional adaptation
Advisors Preferred Trust, through its Hundredfold Select Alternatives Fund, plans to allocate up to 15 percent of its total assets for indirect Bitcoin exposure. Pompliano also notes a growing interest among passive funds to enhance their performance through such investments.
Bitwise Asset Management, one of the first to receive approval for a Bitcoin product, aims to target financial advisors and family offices with its Bitwise Bitcoin ETF, offering a competitive fee of 0.2 percent. Matt Hougan, Chief Investment Officer at Bitwise, points out the growing interest among advisors, with a one to five percent allocation increasingly being considered.
Recent surveys have shown a high level of interest in Bitcoin among financial advisors, especially post-ETF approval, with significant increases in portfolio allocations to crypto assets. Robinhood data indicates that 81 percent of Bitcoin ETF trading volume in the initial week was from individual accounts.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information