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Why Financial Advisors Are Skeptical About Spot Bitcoin ETF Approval

2 mins
Updated by Bary Rahma
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In Brief

  • Less than half of financial advisors expect a spot Bitcoin ETF approval in 2024, contrasting with analysts' 88% likelihood estimate.
  • Financial advisors view an approved Bitcoin ETF as a key catalyst, with 88% awaiting a Bitcoin ETF approval to invest in Bitcoin.
  • Despite regulatory and volatility concerns, client interest in crypto remains high, with a shift in focus towards crypto equity ETFs.
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A recent report revealed a significant gap between advisor expectations and market analysts’ predictions regarding the approval of a spot Bitcoin ETF (exchange-traded fund) in 2024.

It offered a deep dive into the perspectives and predictions of financial advisors on cryptocurrency.

Financial Advisors Doubt Spot Bitcoin ETF Approval

A Bitwise Asset Management and VettaFi survey revealed that 61% of financial advisors don’t anticipate the approval of a spot Bitcoin ETF this year. Surprisingly, this contrasts sharply with crypto enthusiasts’ 88% likelihood estimate for a January approval.

The disparity indicates a potential undervaluing of the market’s readiness for such an ETF

The advisors’ view of an approved spot Bitcoin ETF as a significant catalyst is a major revelation from the survey. Indeed, an overwhelming 88% of advisors interested in purchasing Bitcoin are on standby, awaiting post-ETF approval to make their move.

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach

Access to cryptocurrency remains a hurdle for many advisors. Only 19% indicated the capability to purchase crypto in client accounts. However, the survey shows a strong commitment among those already invested in crypto. 98% of such advisors plan to maintain or increase their crypto exposure in 2024.

Notably, substantial crypto allocations (over 3% of a portfolio) have more than doubled in a year.

Percentage of Portfolios Allocated to Crypto
Percentage of Portfolios Allocated to Crypto. Source: Bitwise

The survey also highlights persistent client interest in crypto, with 88% of advisors receiving crypto-related queries last year. Additionally, 59% of advisors note that their clients independently invest in cryptocurrency, indicating a significant opportunity in held-away assets.

Regarding investment preferences, advisors increasingly focus on crypto equity ETFs for 2024 allocations. Amidst this, regulatory uncertainty (64%) and volatility (47%) remain the top concerns hindering wider crypto adoption in portfolios. Interestingly, Bitcoin is the preferred choice over Ethereum for 71% of advisors, marking a significant shift from the previous year.

As Bitwise CIO Matt Hougan emphasized, advisors who control a substantial portion of wealth in America have not fully priced the potential impact of a spot Bitcoin ETF approval.

“There’s a massive gap in expectations between advisors and those who monitor ETF developments for a living. Couple that with the fact that almost 90% of advisors say they’re waiting for an ETF before making a bitcoin investment, and you see a lot of demand bubbling just below the surface,” Hougan said.

Top crypto platforms in the US | February 2024

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Bary Rahma
Bary Rahman, a talented journalist, graduated from New York University with a degree in Journalism. Skilled in SEO, she has worked with CNN, showcasing her investigative skills and storytelling abilities. In addition to her journalistic accomplishments, Bary has contributed her expertise as a content writer for Binance, crafting insightful articles on the dynamic crypto industry. Her unique fusion of journalism and SEO makes her a versatile and highly respected figure in the industry.
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