The US Securities and Exchange Commission approval of two Bitcoin futures ETFs last week cemented the asset class among institutional investors.
They can now get exposure without having any technical knowledge of it whatsoever. Financial advisers can now also allocate a portion 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 earn fees on it as well.
Green Light for Financial Advisors
Late last week, the WSJ published an article delving into the narrative behind the bullish sentiment for financial advisors. He cited a Bitwise Asset Management survey in which 81% of finance professionals said their clients have requested to invest in crypto in the past year, indicating 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 open the doors to 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 clients and include it alongside traditional investments like stocks and bonds. They can also earn more fees from providing such services.
Bitcoin, not futures
Caution has been advised against anyone attempting to sell any of the new ETFs, which only offer futures, 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 several 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.
