Advisors ‘wary’ of Bitcoin ETFs say they’re on a slow adoption journey, BlackRock CEO says

  • Bitcoin exchange-traded funds debuted in January, but financial advisors have been slow to adopt them.
  • Financial advisors’ concerns about bitcoin include the cryptocurrency’s volatile prices and relatively short track record.
  • Bitcoin ETFs can serve as a bridge between cryptocurrencies and traditional finance, according to Samara Cohen, chief investment officer of ETFs and index investing at BlackRock.

Jonathan Ra | norphoto | Getty Images

The long-awaited Bitcoin exchange-traded funds launched in January, and financial advisors are on their way — albeit gradually — toward adopting them, according to BlackRock’s Samara Cohen.

Speaking at the conference, she said that around 80% of Bitcoin ETF purchases currently are likely to come from “self-investors who have allocated their own funds, often through an online brokerage account”. Coinbase case for crypto summit In New York City on Thursday. iShares Bitcoin Trust (IBIT) was among the funds that debuted earlier this year.

Cohen, chief investment officer for ETFs and index investments at BlackRock, noted that hedge funds and brokerage firms were also buyers, based on fourth-quarter 13-F filings, but registered investment advisers were a little more “cautious.”

CNBC recently polled its board of advisors about why they and their colleagues are wary of the new products, which represent a regulated, familiar investment product for a new asset class that has received significant attention in recent years. Responses ranged from Bitcoin’s notorious price volatility to the leading cryptocurrency being too new to establish a track record. Regulatory compliance and cryptocurrencies’ reputation for fraud and scandal were also on advisors’ minds.

“I would call them cautious…that’s their job,” Cohen said of skeptical financial advisers.

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“The investment advisor is the fiduciary for his clients,” she added. “This is an asset class that has seen 90% price volatility at certain times in history, and their job is to build portfolios and do risk analysis and due diligence. They’re doing that now.”

See chart…

iShares Bitcoin Trust (IBIT) in 2024

“This is a moment in terms of putting out important data and risk analyses [and determining] She added: “The role that Bitcoin can play in a portfolio, and the appropriate type of allocation given the investor’s risk tolerance and liquidity needs.” “That’s what a consultant is supposed to do, so I think this journey we’re on is exactly the right person and they’re doing their job.”

Cohen said she sees bitcoin ETFs as a bridge between cryptocurrencies and traditional finance — especially for investors who may be interested in allocating to bitcoin without having to manage their risks across two different ecosystems. She said that before ETFs, the current trends toward cryptocurrencies were not enough for what some investors wanted to do.

Alicia Haas, CFO of Coinbase, said bitcoin is “on a slow journey of adoption” — a theme that resonated throughout the conference sessions.

Blue Macellari, head of digital asset strategy at T. Rowe Price, noted that the 1% allocation is considered by some investors to be a safe and comfortable amount. She said she views wallet allocations in Bitcoin as binary events, where they must be greater than 1% or zero, but also acknowledged the cautious approach to adoption.

“There is a psychological component where people need to test the waters and feel comfortable,” Macellari said. “It’s a paradigm shift… It takes time for people to ease their way into it.”

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