16 February 2024
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, engaged in a discussion with CNBC’s Bob Pisani on the future of spot Bitcoin ETFs and their integration within diversified portfolios.
$150 Billion Ready To Enter The Bitcoin Rabbit Hole
Ric Edelman cast a bold prediction about the future inflows into spot Bitcoin ETFs, foreseeing an unprecedented $150 billion by the end of 2025, up from the current $5 billion. He confidently stated, “I’m anticipating that by the time we get to the end of 2025, we’re talking two years, we’re gonna see total inflows of more than $150 billion. We’re only at $5 billion right now.” This represents a significant leap, signaling a transformative phase in cryptocurrency investment.
The conversation then turned to the underlying factors expected to drive this surge. Edelman elaborated on the potential inflows from independent financial advisors, who currently manage about $8 trillion in assets. With three-quarters indicating a readiness to allocate to Bitcoin ETFs, according to recent industry studies, Edelman explained the math: “Do the arithmetic. $8 trillion, 77% and 2.5% is $150 billion worth of flows.”
Notably, this calculation only takes into account independent advisors, leaving out the substantial potential from wirehouses, regional broker-dealers, and institutional investors, as Edelman emphasized. On a bullish note, Matt Hougan highlighted the enduring nature of investments in Bitcoin ETFs by financial advisors, contrasting with the speculative short-term trading often associated with cryptocurrencies.
“The people who are buying Bitcoin ETFs now, the financial advisors, they make their allocations for the long term. Financial advisors are usually not short-term traders, they’re not speculating where Bitcoin will be next week. They make an allocation that they hold for 1 year, 3 or 5 years,” Hougan remarked.
Independent advisors control $8 trillion in assets, and surveys show 77% of them want to add Bitcoin to their portfolios, aiming for an average allocation of 2-3%.
This means we’ll likely see $150 billion flowing into Bitcoin ETFs from advisors alone.
H/T @RhinoBTCapp pic.twitter.com/jc0F98KBAL
— Thomas | heyapollo.com (@thomas_fahrer) February 14, 2024
BTC Price Could Reach $150,000
Delving into who is leading the charge in Bitcoin ETF investments, Hougan noted, “We are seeing a lot of flows from RIAs, we are seeing from family offices and we are seeing some people who rotate off from other products.” This trend points to a broadening acceptance and recognition of Bitcoin ETFs within the investment community.
Edelman further bolstered his $150 billion inflow projection with the anticipated impact on Bitcoin’s price, suggesting it could reach $150,000 within two years due to the fixed supply and increasing demand dynamics. “This number excludes inflows from wirehouses, regional broker-dealers, and institutional investors,” he added, highlighting 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 are tracking prices well, investors have peace of mind with access to all the data and ETFs are simple and secure with low fees.”
Both experts concurred on the strategic value of including spot Bitcoin ETFs in investment portfolios for diversification. Hougan summarized this sentiment, saying, “They see Bitcoin as a non-correlated asset that when used for rebalancing and managed professionally will not lead to any volatility for the portfolio.”
Reflecting on the comparative success of Bitcoin ETFs against traditional gold ETFs, Hougan highlighted the competitive fee structure and the strong demand observed 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 traded at $51,808.