The US Securities and Exchange Commission’s approval of two Bitcoin futures ETFs last week has cemented the asset class among institutional investors.
They can now get exposure without having any technical knowledge of it whatsoever. Financial advisors can now also allocate a proportion of client portfolios to Bitcoin.
MicroStrategy CEO and Bitcoin bull Michael Saylor commented that there are over 200,000 financial advisors in the US managing more than $100 trillion in wealth. They are now more likely to include BTC 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
Green Light for Financial Advisors
Late last week, the WSJ published an article delving into the narrative behind the bullish sentiment for financial advisors. It cited a Bitwise Asset Management survey in which 81% of financial professionals said their clients had asked about investing in crypto over the past year, which indicates a clear demand.
Ben Cruikshank, head of Flourish, a subsidiary of Massachusetts Mutual Life Insurance, commented that financial advisors “feel the need to offer things clients are looking for, even if it makes them uncomfortable.”
A new service from online brokerage firm Interactive Brokers Group enabled financial professionals to trade Bitcoin last week and many more will be opening the gates for digital assets.
The company acts as a custodian, trades facilitator, record maintainer, working for more than 5,700 advisers with a total of $60 billion in clients’ assets. The new service will allow advisors to buy crypto for their customers and include it alongside traditional investments such as stocks and bonds. They can also earn more fees from providing such services.
Bitcoin, Not Futures
Caution was advised against anyone trying to sell one of the new ETFs, which only offer futures contracts, not the asset itself. ProShares and Valkyrie buy contracts based on market prices at the time, they do not custody physical BTC as companies such as Grayscale do.
That said, the ProShares fund broke a number of trading volume records last week. It was the first fund to reach $1 billion in assets under management in just two days, and it generated $1 billion in volume on the first day.
BTC prices were still cooling from last week’s all-time high, trading at around $62,000 at the time of writing. Additional demand from financial advisors could be very bullish over the long term as institutional investors are less likely to sell at the whim of a bit of volatility.