#BitcoinETFs #CryptoInvestment #FinancialAdvisors
Financial Advisors Tread Cautiously as Bitcoin ETFs Bridge the Gap Between Crypto and Traditional Finance
Bitcoin exchange-traded funds (ETFs) have been available since January, but financial advisors have been slow to adopt them. The hesitation stems from several concerns, including the volatile nature of bitcoin, its limited history, regulatory compliance, and associations with fraud and scandal.
Samara Cohen, BlackRock's chief investment officer of ETF and index investments, acknowledges the gradual adoption of bitcoin ETFs by financial advisors. While approximately 80% of purchases have been made by self-directed investors, hedge funds, and brokerages, registered investment advisors have been more cautious.
A recent poll by CNBC's Advisor Council revealed that advisors are hesitant due to bitcoin's price volatility, its short track record, and regulatory compliance. The crypto's association with fraud and scandal was another concern.
Cohen views bitcoin ETFs as a bridge between crypto and traditional finance, allowing investors to allocate a portion of their portfolio to bitcoin without managing risk across two different ecosystems. Prior to the ETFs, existing avenues into crypto were deemed insufficient for some investors' needs.
Coinbase's chief financial officer, Alesia Haas, echoed the sentiment that bitcoin is on a slow path to adoption. This theme was consistent throughout the conference sessions. Blue Macellari, head of digital assets strategy for T. Rowe Price, noted that some investors consider a 1% allocation to be a safe, comfortable amount. She views portfolio allocations to bitcoin as binary events, where they should either be greater than 1% or zero.
Cohen emphasized that financial advisors are diligently analyzing the role bitcoin can play in a portfolio, considering factors like risk tolerance and liquidity needs. This process is essential for advisors, as bitcoin has experienced 90% price volatility at certain points in history. Cohen believes that this journey is the right one and that advisors are doing their jobs by providing important data, risk analytics, and determining the appropriate allocation for their clients.
Original Article: https://www.cnbc.com/2024/06/16/advisors-wary-of-bitcoin-etfs-are-on-slow-adoption-journey-says-blackrock-exec.html
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