Advisors ‘wary’ of bitcoin ETFs are on a slow adoption journey, says BlackRock exec – CNBC

A highly anticipated bitcoin exchange-traded fund was launched in January and financial advisors are slowly starting to adopt it, according to BlackRock’s Samara Cohen.

For now, she said, about 80% of bitcoin ETF purchases are likely coming from “self-managed investors who have made their own allocations, often through online brokerage accounts.” Coinbase Cryptocurrency Summit Thursday in New York City. iShares Bitcoin Trust (IBIT) was one of the funds that debuted earlier this year.

Cohen, BlackRock’s chief investment officer for ETF and index investing, noted that hedge funds and brokerage firms have also been buyers, but registered investment advisers have been a bit more “cautious,” according to last quarter’s 13-F filings.

CNBC recently surveyed the Advisor Council about why they and their colleagues are so cautious about the new product, a familiar, regulated investment vehicle for a new asset class that has garnered a lot of interest in recent years. Answers ranged from Bitcoin’s notorious price volatility to the fact that the flagship cryptocurrency is still in its early stages and has yet to make a big mark. Regulatory compliance and cryptocurrency’s reputation for scams and scandals also topped advisors’ minds.

“They would say be cautious … that’s their job,” Cohen said of skeptical financial advisers.

“Investment advisers are fiduciaries to their clients,” she added. “This is an asset class that has historically seen volatility of up to 90 percent, and their job is to construct portfolios, do risk analysis and due diligence. That’s what they’re doing right now.”

“This is the moment to present the data that really matters, the risk analysis. [and determining] “What role can bitcoin play in a portfolio, what is the appropriate allocation given an investor’s risk tolerance and liquidity needs,” she added. “That’s what advisors should be doing, and I think the journey we’re on is exactly right and advisors are doing their job.”

Cohen believes a Bitcoin ETF can bridge the gap between crypto and traditional finance, especially for investors who want to invest in Bitcoin without having to manage risk in two different ecosystems. Before ETFs, existing avenues of entry into crypto were insufficient to meet the needs of some investors, he said.

Coinbase Chief Financial Officer Alecia Haas said Bitcoin is “slowly on the path to adoption,” a theme that was reflected throughout the conference sessions.

Blue Masellari, head of digital asset strategy at T. Rowe Price, noted that some investors view a 1% allocation as a safe and secure amount. He believes a portfolio allocation to Bitcoin is a binary event and should be 1% or more or nothing, but acknowledges a cautious approach to adoption.

“There’s a psychological element to it that people need to try things out and get used to,” Masellari said. “It’s a paradigm shift… it’s going to take time for people to get used to it.”