tl;dr
The launch of Bitcoin exchange-traded funds (ETFs) in January has been a significant milestone, but financial advisors are approaching these new investment vehicles with caution. Samara Cohen, BlackRock’s Chief Investment Officer of ETF and Index Investments, highlighted that most Bitcoin ETF purcha...
Financial advisors are treading cautiously when it comes to Bitcoin exchange-traded funds (ETFs), primarily due to historical price volatility and the imperative need for comprehensive risk analysis and due diligence. BlackRock’s Chief Investment Officer of ETF and Index Investments, Samara Cohen, emphasized that while most Bitcoin ETF purchases are currently made by self-directed investors, hedge funds, and brokerages, registered investment advisors remain hesitant.
About 80% of Bitcoin ETF purchases are presently made by self-directed investors through online brokerage accounts, with hedge funds and brokerages also actively participating. However, registered investment advisors are exercising caution, considering their fiduciary responsibility to thoroughly assess Bitcoin’s historical price volatility, which has at times reached 90%, mandating comprehensive risk analysis and due diligence.
Some analysts, however, hold an optimistic view on Bitcoin’s future, with Bernstein predicting that Bitcoin’s price could hit $1 million by 2033. This projection is underpinned by unprecedented demand from spot ETFs and Bitcoin’s limited supply, with Bernstein's earlier estimate of $150,000 for 2025 being revised to a cycle-high of $200,000, indicating their growing confidence in Bitcoin’s potential.
WAX co-founder William Quigley also weighed in on the proliferation of ETFs for other cryptocurrencies, highlighting that the success of Bitcoin ETFs is likely to catalyze similar products. However, he cautioned that underperforming ETFs might face potential shifts or shutdowns if demand slows, reflecting the voracious appetite of Wall Street for profitable opportunities.