The recent debut of spot bitcoin ETFs is expected to broaden the audience of cryptocurrency investors, including registered investment advisors (RIAs) and wealth management firms.
That could be a boon for the new ETFs, including the VanEck Bitcoin ETF Trust (HODL). HODL already has more than $81 million in assets under management in less than a week of trading. Its peers could benefit from an influx of cash from the advisory community. Many of them have wanted to access crypto on their clients’ behalf. However, they have been unable to do so due to platform and regulatory stipulations.
HODL and the other spot bitcoin ETFs change that landscape for the better. And only a small number of brokerages and advisor platforms are currently barring access to these new ETFs. That’s a sign that broker-dealers know their clients, including advisors, want access to bitcoin.
Floodgates Could Open for HODL & Peers
By some estimates, there are as much as $30 trillion in assets managed by RIAs and wealth management firms. This indicates that just a small amount of that capital needs to trickle into HODL and friends to make the new spot bitcoin ETFs successes. Additionally, Standard Chartered forecast inflows of $50 billion to $100 billion just this year into the rookie bitcoin ETFs.
Substantial portions of those figures could come by way of advisors who have increasingly been allocating 1% to 5% of client portfolios to digital assets. Plus, a case can be made that advisors are the next logical step in Bitcoin investment adoption. Why? Because other professional investors have been in the crypto game for some time.
“Even before the SEC’s announcement Wednesday, the 2022 CFA Institute Investor Trust Study found that 94% of state and local pension plans had some crypto exposure. The new products potentially offer more legitimacy and lower costs for retirement plans that want to increase allocation,” reported MacKenzie Sigalos for CNBC.
That increased legitimacy is important. And it’s supported by the fact that well-known ETF sponsors, including VanEck, are leading the way in the new corner of the ETF realm.
There’s another reason why advisors could be quick to embrace products such as HODL. Bitcoin and other cryptocurrencies are effective avenues for enhancing relationships with younger clients. Additionally, it could turn Gen Z and millennial prospects into clients. With the great wealth transfer taking shape, that fact likely isn’t lost on many RIAs.
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