Bitcoin ETFs: The Slow but Steady Adoption Journey

The long-awaited bitcoin exchange-traded funds (ETFs) finally made their debut in January, but financial advisors have been slow to adopt them. According to Samara Cohen, BlackRock’s chief investment officer of ETF and index investments, about 80% of bitcoin ETF purchases have likely been coming from self-directed investors who have made their own allocation, often through an online brokerage account.

Bitcoin ETFs: A Bridge Between Cryptocurrency and Traditional Finance

Financial advisors have been cautious about the new products, citing concerns around bitcoin’s volatile prices and its relatively short track record. Regulatory compliance and the crypto’s reputation for fraud and scandal were also on advisors’ minds. As Cohen noted, “An investment advisor is a fiduciary to their clients… This is an asset class that has had 90% price volatility at times in history, and their job is really to construct portfolios and do the risk analysis and due diligence.”

“I would call them wary… that’s their job,” Cohen said of the skeptical financial advisors.

Despite the slow adoption, Cohen believes that bitcoin ETFs can act as a bridge between cryptocurrency and traditional finance. The iShares Bitcoin Trust (IBIT) was among the funds to debut earlier this year, and hedge funds and brokerages have also been buyers, based on last quarter’s 13-F filings.

Bitcoin’s Volatile Prices: A Concern for Financial Advisors

As the cryptocurrency market continues to evolve, it will be interesting to see how financial advisors and investors respond to the new investment opportunities. Will they continue to be wary, or will they start to see the potential benefits of bitcoin ETFs?

The Evolving Cryptocurrency Market