Institutional Investors Embrace Bitcoin ETFs According to BlackRock Executive
The introduction of U.S. spot Bitcoin exchange-traded funds (ETFs) has been met with success, as major financial institutions are showing interest in the investment. However, registered investment advisors (RIAs) are still cautious about the new product, according to Samara Cohen, BlackRock’s chief investment officer of ETF and index investments, at Coinbase’s State of Crypto Summit this week.
Institutional investors are increasingly intrigued, with Blackrock’s spot Bitcoin ETF attracting significant inflows. However, most buyers so far are “self-directed investors using an online brokerage account,” as stated by Cohen. She emphasized that they are cautious and that it is their job to be so.
Prominent asset managers see crypto as a valuable portfolio allocation, and pension funds and other large institutions are exploring crypto opportunities.
Over 600 institutions reported their investments in U.S. spot Bitcoin ETFs in the last quarter’s 13-F filings. This includes Millennium Management, Morgan Stanley, JPMorgan, UBS, Wells Fargo, and UBS, among others.
RIAs are cautious for several reasons, including the high volatility of cryptocurrencies, which can reach up to 90%. They prioritize managing risk for their clients, and such volatility makes crypto a risky investment. Additionally, there is a short track record of the asset class, and less historical data and established risk analysis tools for crypto compared to traditional assets. This makes it necessary for RIAs to take time to be comfortable with the role of crypto in a portfolio.
However, RIAs are not entirely against crypto. They understand their responsibility in managing client risk and building portfolios, so careful analysis of Bitcoin’s role is needed. Cohen also noted that spot Bitcoin funds offer a regulated way for traditional investors to gain exposure to Bitcoin without dealing directly with crypto exchanges.
Both industry leaders and advisors agree that Bitcoin adoption through ETFs will be a gradual process. Alesia Haas, Coinbase’s chief financial officer, expects a slow adoption of Bitcoin through ETFs.
Blue Macellari, head of digital assets strategy for T. Rowe Price, believes that some investors view a 1% allocation to Bitcoin as a safe and comfortable starting point. She stated that Bitcoin portfolio allocations tend to be all-or-nothing decisions. Investors either choose a greater allocation above 1% or stay out entirely.
Spot Bitcoin ETFs in the U.S. accumulated 17,144 BTC in June, with BlackRock’s iShares Bitcoin Trust (IBIT) reporting inflows since the start of the month. As of June 16, IBIT has managed 305,591 BTC, worth almost $20 billion.
Last week, these ETFs recorded negative flows of over $600 million, according to data from Farside and HODL15Capital. On June 13, the trend for ETFs turned negative, although there was a brief resumption of inflows the following day.
In other news, SEC Chairman Gary Gensler provided an update on Ethereum ETFs, suggesting that final approval for a spot Ethereum ETF could be completed by September, with estimates that the SEC will approve Ethereum ETFs for trading on July 2, as reported by Bloomberg ETF analyst Eric Balchunas.
