Up until sometime last week, the Bitcoin investments were not considered to be mainstream enough for most financial advisors but the landscape seems quite different now.
The US Securities and Exchange Commission’s (SEC) approval of two Bitcoin futures ETFs in the past week has strengthened the asset class among institutional investors. Now, they can get exposure without needing any technical knowledge of it in any manner. Financial advisors can now also allocate a segment of client portfolios to BTC.
Michael Saylor, MicroStrategy CEO and Bitcoin bull said that there are more than 200,000 financial advisors in the United States managing over $100 trillion in wealth. Today, they are more likely to feature bitcoin as they can also earn fees on it.
There are approximately 218,000 financial advisers in the United States managing assets in excess of $110 trillion, and as of this week they can allocate client assets to #Bitcoin via ETFs which integrate with their business model & information systems.https://t.co/Ezc7A2nW2C
— Michael Saylor⚡️ (@saylor) October 23, 2021
Approval For Financial Advisors
In the past week, the Wall Street Journal published an article delving into the narrative that is pushing the bullish sentiment for financial advisors. It then cited a Bitwise Asset Management survey where 81% of financial professionals stated that their clients had asked about investing in cryptocurrency over the last 12 months, which shows a clear demand.
The head of Flourish, a subsidiary of Massachusetts Mutual Life Insurance, Ben Cruikshank, said:
“Financial advisors feel the need to offer things clients are looking for, even if it makes them uncomfortable.”
A brand new service from online brokerage company Interactive Brokers Group enabled financial professionals to trade Bitcoin in the past week and many others will be opening the flood gates for digital assets.
The firm acts as a custodian, record maintainer, and trades facilitator, working for over 5,700 advisers with a cumulative of $60 billion in clients’ assets. This new service will enable advisors to acquire cryptocurrency for their clients and include it alongside traditional investments like bonds and stocks. Also, they can earn more fees from offering these services.
Buy Bitcoin NowBitcoin Adoption, Not Futures
Caution must be taken against anybody who is trying to sell any of the new ETFs that only offer futures contracts and not the asset itself. Valkyrie and ProShares purchase contracts based on the market prices at the time. But, they do not custody physical bitcoin as firms like Grayscale do.
With that said, the ProShares fund broke several trading volume records in the past week. It was the first fund to surpass $1 billion in assets under management (AUM) in two days, and it generated over $1 billion in volume on the first day.
The prices of Bitcoin were still cooling down from the past week’s all-time high, trading at about $61,500 at the time of publication. Growing demand from financial advisors may be quite bullish over the long term as institutional investors are not likely to sell at the introduction of a little volatility.
