Bitcoin ETFs Make $50 Billion Strides Toward Mainstream Adoption in the Cryptoverse
Spot Bitcoin exchange-traded funds (ETFs) would bring in $55 billion of assets during their first five years, Bitwise Investments CEO Matthew Hogan forecast last October. After all sets and done though, the 10 newly authorized Bitcoin ETFs had taken in over $52 billion by late August this year, just eight months after they launched Track Insight data.
Hogan said his initial prediction was too subdued and believes the market will grow into “hundreds of billions of dollars” for these products.
However, the long-term success of Bitcoin ETFs is still questionable regardless of this rapid growth. Since its launch era a decade and a half ago, Bitcoin has always been volatile in terms of price action, with these specific ETFs tracking the movement.
The speculative nature of Bitcoin, which is often compared to art or a fine wine rather than commodities like gold and others that traders are familiar with; one was easy on their wallet, the other not so much.
The most significant development came on August 17, when Wall Street titan Morgan Stanley announced that it would permit more than 15,000 financial advisers to place bets specifically in two of the recently rolled out Bitcoin ETFs the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund for their clients.
This was a significant step moving forward what some hope to be an eventually recognized asset investment, or ETF. Still, John Hoffman head of distribution and partnerships at Grayscale Funds, which amassed $800 million in annual net inflows across their various trusts this year even as the broader ETF industry saw fewer than 20 Bitcoin products fail to launch on U.S. exchanges according to a filing archive.
Said these days wealth management firms are now less concerned with taking on risk by adopting Bitcoin-ETPs but rather that letting them pass up risks being more hazardous; “it has almost become necessary for an adviser today to have some level understanding or willingness around considering its use when it comes time work-in such products inside client portfolios,” he stated simply before adding.
So far, retail investors are the primary source of inflows into these new ETFs. The investments in this kind of product are only widespread among a few large institutions, such as the Wisconsin Investment Board and hedge funds.
CF Benchmarks CEO Sui Chung, responsible for the Bitcoin index underpinning several ETFs, explained that those first $50 billion were from investors very familiar with all things bitcoin. The next step is to get people working for more conventional financial institutions, including the risk committees at Morgan Stanley and their ilk both here and across Europe, on board with these products, albeit reluctantly.
News of early adopters like Morgan Stanley remains the subject of much fanfare, a sign that crypto ETFs still have some way to go before going mainstream. The early movers who are being applauded for their pioneering effort, said Norton Rose Fulbright attorney Andrew Lom, also face high exposure to risk.
Recently, Lom has been zeroing in on what he sees as BTC ETFs’ clear mainstream potential whether they will have sufficient liquidity to contend with falling sloth markets. As more model portfolios with advisers are used for asset allocation decisions, he said the effect will come after Bitcoin ETFs are considered a standard part of the investable universe in many different models.
Nonetheless, some of Bitcoin’s biggest cheerleaders readily admit that a full-blown decoupling into broader investment portfolios may take six to 12 months as the financial world grapples with what role it sees for Bitcoin ETFs in its future.
