At the Exchange ETF Conference in Miami Beach, Matt Hougan, Chief Investment Officer at Bitwise Asset Management, and Ric Edelman, founder of the Digital Assets Council of Financial Professionals, spoke with CNBC’s Bob Pisani about the future of spot Bitcoin ETFs and their integration within diversified portfolios.
$150 billion ready to enter the Bitcoin rabbit hole
Ric Edelman made a bold prediction about the future inflows to spot Bitcoin ETFs, foreseeing an unprecedented $150 billion by the end of 2025, up from the current $5 billion. He said confidently: “I expect that by the end of 2025, we’re talking about two years, we’ll see a total inflow of over $150 billion. We’re only at $5 billion right now.” This represents a significant leap, signaling a transformative phase in cryptocurrency investing.
The conversation then turned to the underlying factors expected to drive this boom. Edelman elaborated on the potential influx of independent financial advisers, who currently manage about $8 trillion in assets. With three-quarters indicating a willingness to allocate to Bitcoin ETFs, according to recent industry studies, Edelman explained the math: “Do the math. $8 trillion, 77% and 2.5% is $150 billion in flow.”
Notably, this calculation only considers independent advisors, leaving out the significant potential of wirehouses, regional brokers and institutional investors, as Edelman emphasized. On a bullish note, Matt Hougan highlighted the enduring nature of investments in Bitcoin ETFs by financial advisors, as opposed to the speculative short-term trading often associated with cryptocurrencies.
“The people who buy Bitcoin ETFs now, the financial advisors, they make their allocations for the long term. Financial advisors are usually not short-term traders, they don’t speculate where Bitcoin will be next week. They make an allocation that they last for 1 year, 3 or 5 years,” Hougan noted.
Independent advisors manage $8 trillion in assets, and surveys show that 77% of them want to add Bitcoin to their portfolios, aiming for an average allocation of 2-3%.
That means we’ll likely see $150 billion flow into Bitcoin ETFs from advisors alone.
H/T @RhinoBTCapp pic.twitter.com/jc0F98KBAL
February 14, 2024
BTC price can reach $150,000
Delving into who is leading the charge in Bitcoin ETF investing, Hougan noted, “We’re seeing a lot of flow from RIAs, we’re seeing from family offices and we’re seeing some people pivoting from other products.” This trend indicates a broadening of acceptance and recognition of Bitcoin ETFs within the investment community.
Edelman further reinforced his $150 billion inflow projection with the expected impact on Bitcoin’s price, suggesting that it could reach $150,000 within two years due to the fixed supply and increasing demand dynamics. “This number excludes inflows from wirehouses, regional brokers and institutional investors,” he added, stressing the conservative nature of his estimate.
Hougan complemented the discussion by shedding light on the broader implications for the ETF and crypto markets, praising the regulated, efficient and investor-friendly nature of Bitcoin ETFs. He pointed out, “ETFs track prices well, investors have peace of mind with access to all the data and ETFs are simple and safe with low fees.”
Both experts agreed on the strategic value of including spot Bitcoin ETFs in investment portfolios for diversification. Hougan summed up this sentiment, saying, “They see Bitcoin as a non-correlated asset that, when used for rebalancing and professionally managed, will not lead to any volatility for the portfolio.”
Hougan reflected on the comparative success of Bitcoin ETFs versus traditional gold ETFs, highlighting the competitive fee structure and strong demand for the Bitwise Bitcoin ETF (NYSE: BITB ). “With Bitwise charging 20 basis points, fees are half that of the largest gold ETF,” he noted, underscoring the financial efficiency and appeal of Bitcoin ETFs to a wide range of investors.
At press time, BTC was trading at $51,808.
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