Bitcoin ETFs have not gained popularity among financial advisors, as the initial excitement surrounding their launch has faded. The main concerns are related to market timing and regulatory compliance, as clients prioritize stability and long-term growth.
Despite the hype surrounding Bitcoin ETFs, financial advisors are still hesitant to recommend them to clients. Some broker-dealers allow the purchase of Bitcoin ETFs but impose quantity limits, while others prohibit advisors from selling them altogether.
The original concept behind Bitcoin ETFs was that financial advisors would use them to guide wealthy clients into Bitcoin investments. However, almost six months after their debut, there has been no rush among advisors to embrace them. A CNBC investigation revealed that many advisors remain as skeptical about Bitcoin now as they were before.
However, this does not mean that Bitcoin ETFs have been a failure. On the contrary, they have been some of the most successful launches in history. For example, BlackRock’s iShares Bitcoin Trust (IBIT) has reached $20 billion in assets under management, even without significant support from advisors.
CNBC interviewed a dozen members of CNBC’s Advisor Council, including Lee Baker, who explained why many planners are still hesitant about Bitcoin and Bitcoin ETFs. The two main concerns are the time Bitcoin has spent in the market and regulatory compliance. “When [Bitcoin] becomes more regulated, you will see more adoption,” said Ted Jenkin, CEO of oXYGen Financial in Atlanta. He added that if Bitcoin can demonstrate stability comparable to that of a technology firm over time, it will gain more adoption.
Most advisors do not discuss Bitcoin ETFs with their clients, and they do not receive many inquiries about them either. Some advisors are educating themselves about Bitcoin, while others, particularly those with older and more conservative clients, dismiss it altogether. Advisors with younger clients who have a higher risk tolerance and longer investment horizons show slightly more interest, but the introduction of ETFs has not significantly changed the landscape.
Advisors are primarily concerned about long-term growth when considering Bitcoin ETFs. Rianka Dorsainvil, co-founder of 2050 Wealth Partners, stated that her clients prioritize stability and long-term growth, which is why she does not include Bitcoin ETFs in her investment strategies due to their early stage and Bitcoin’s volatility. Cathy Curtis, founder of Curtis Financial Planning in Oakland, California, shares the skepticism.
Curtis mentioned that she would only consider adding Bitcoin to portfolios if it demonstrates stable returns over at least 15 years. “If it proves itself to be a true diversifier alongside equities, for example, maybe,” she said. “But the asset’s history has not convinced me of that.”
Douglas Boneparth, founder of Bone Fide Wealth in New York City, emphasized that compliance offices and broker-dealers play a crucial role in determining whether advisors can recommend Bitcoin ETFs. “Just because the ETF was launched doesn’t mean the floodgates were opened,” he said. “The ability to allocate to it is not easy.”
In conclusion, financial advisors remain cautious about Bitcoin ETFs due to concerns about market timing and regulatory compliance. Clients prioritize stability and long-term growth, and until Bitcoin can demonstrate these qualities, advisors are unlikely to recommend it as an investment option.
