A BlackRock Inc. executive has suggested that financial advisors are proceeding cautiously with Bitcoin BTC/USD exchange-traded funds after the Securities and Exchange Commission (SEC) approved them in January.
What Happened: Samara Cohen, BlackRock’s chief investment officer of ETF and index investments, stated that financial advisors are gradually embracing Bitcoin ETFs, reported CNBC.
Despite the slow adoption, approximately 80% of Bitcoin ETF purchases have been made by self-directed investors, Cohen said. She added that hedge funds and brokerages have also shown interest, but registered investment advisors have been more cautious.
"I would call them wary … that's their job," Cohen said of the skeptical financial advisors.
When questioned about the advisors’ skepticism, Cohen pointed out the asset class’s notorious price volatility, its relatively short track record, and concerns about regulatory compliance and fraudulent activities.
"An investment advisor is a fiduciary to their clients," Cohen added. "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. They're doing that right now."
According to Cohen, Bitcoin ETFs could serve as a bridge between traditional finance and crypto, offering a more straightforward way for investors to allocate funds to Bitcoin.
She defended the advisors’ cautious approach, stating that their role as fiduciaries requires them to conduct thorough risk analysis and due diligence.
"There's a psychological component where people need to test the waters and get comfortable," Blue Macellari, head of digital assets strategy for T. Rowe Price, said. "It's a paradigm shift … it takes time for people to ease their way into it."
Investors looking into bitcoin ETFs can explore options like BlackRock’s iShares Bitcoin Trust IBIT, Grayscale Bitcoin Trust GBTC, and Fidelity’s Wise Origin Bitcoin Trust FBTC to broaden their investment portfolio.
Why It Matters: The cautious stance of financial advisors on bitcoin ETFs comes amid a backdrop of mixed sentiments in the cryptocurrency market.
Recently, Robert Kiyosaki, author of “Rich Dad, Poor Dad,” addressed concerns about Bitcoin’s high price, arguing that the cryptocurrency is not as expensive as it will be in the future. Kiyosaki’s comments reflect a broader debate on Bitcoin’s valuation and its growth potential.
Additionally, a recent report by Bernstein predicted that Bitcoin could hit $1 million by 2033, driven by increasing demand from spot ETFs and the limited supply of the cryptocurrency. The report also revised its 2025 estimate for Bitcoin’s price upward to $200,000, indicating strong bullish sentiment in the long term.
Investors interested in bitcoin ETFs may check out BlackRock's iShares Bitcoin Trust IBIT, Grayscale Bitcoin Trust GBTC, and Fidelity's Wise Origin Bitcoin Trust FBTC to diversify their portfolio.
Price Action: Bitcoin’s price stands at $65,915, with a decline of 0.56% in the last 24 hours. Year to date, Bitcoin has seen a significant increase of 49.36%, while over the past year, it has surged by 148.90%, according to data from Benzinga Pro.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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