Bitcoin ETF To Welcome Over 500 Advisors In May: Bloomberg Analyst

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As a seasoned crypto investor and analyst with a deep understanding of the market, I firmly believe in the potential growth of Bitcoin ETFs among institutional investors. Eric Balchunas’ recent comments on the growing interest from investment advisors resonate with my own observations. The delayed reporting of 13F filings could potentially unveil a significant number of institutional investors who have chosen to invest in Bitcoin ETFs.

Expert comment: Eric Balchunas, a seasoned ETF analyst at Bloomberg, has shared his insights on the ongoing debate among market players about the readiness of institutional investors for Spot Bitcoin Exchange-Traded Funds (ETFs). This comes after Jim Bianco raised doubts about institutional adoption of these funds.

Bitcoin ETFs Will Witness A Slew Of 13F Filings In May

As a researcher following the trends in investment advisory, I want to add my perspective to Bianco’s post. Balchunas brought up an intriguing point about the increasing curiosity among investment advisors towards Bitcoin Exchange-Traded Funds (ETFs). Moreover, it is essential to note that a significant number of 13F filings are yet to be disclosed. These filings could potentially reveal a substantial number of institutional advisors who have opted for Bitcoin ETFs. I expressed, “A vast majority of the 13F filings remain unreported, and currently, approximately 150 advisors from various parts of the country have publicly declared their ownership of spot Bitcoin ETFs.”

The Bloomberg analyst further projected that the number of advisors disclosing ownership could rise substantially by May 15th, possibly surpassing the 500 mark. This heightened interest among advisors, as suggested by Balchunas, is expected to shatter previous records for the first quarter of the market.

He likewise addressed Bianco’s observation regarding the lower involvement of investment advisors in Spot Bitcoin ETFs versus other ETFs. Balchunas conceded that advisors have been cautiously investing in these ETFs, but he expects larger commitments in the future. He mentioned that historically, new ETFs often see limited advisor participation initially, with substantial adoption usually taking place within the first year.

Balchunas issued a word of caution against underestimating the significance of Bitcoin ETFs. He also urged against being overly stubborn on this matter, as it may put one at odds with powerful financial entities like BlackRock, Fidelity, and Invesco. Moreover, he highlighted the substantial impact of these institutions’ vast wholesaling resources, established relationships, and unwavering loyalty to their ETF offerings.

Furthermore, Balchunas highlighted that the institutional adoption of ProShares Bitcoin Strategy ETF (BITO) has been gradual. He expressed, “Institutional investors currently hold 40% of BITO’s assets, but it took some time for them to reach this point.”

Jim Bianco’s Arguments

As an analyst, I recently observed in my study that investment advisors collectively manage around 35% of the total assets in Exchange-Traded Funds (ETFs). However, their allocation towards the newly introduced Spot Bitcoin ETF is significantly lower than average, amounting to less than 1%. This notable disparity raises my concern that Bitcoin ETFs predominantly attract “paper-handed small-time traders,” often referred to as “degens.”

According to Bianco’s analysis, individual investors in the retail sector are approaching the point where they will no longer make a profit on their Bitcoin ETF investments. This situation carries a substantial risk: if market circumstances worsen, these investors may sell en masse. To bolster his claim, Bianco referred to findings from a Citi study. The data showed that most Bitcoin ETF owners do not belong to the institutional investor or wealth manager category, with assets below $100 million.

As a researcher examining Bitcoin Exchange-Traded Funds (ETFs), I’ve noticed that the majority of investors are retail traders and hedge funds, with their filings yet to be disclosed. Additionally, Bianco highlighted the relatively small average trade size in these ETFs, approximating $14,000, suggesting significant retail investor involvement and a tendency toward momentum trading. However, he issued a caution that this propensity for chasing market trends could potentially intensify price fluctuations.

Additionally, if prices fall below the typical buying price, the consequences could be amplified, causing retail investors to panic sell in large numbers. Bianco reiterated his belief in Bitcoin ETFs as a valuable addition to the investment landscape for digital assets. However, he urged caution against placing too much faith in them and emphasized the importance of keeping sight of the ultimate objective: developing viable alternatives to conventional financial structures.

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2024-04-29 16:20