Advisers could drive Bitcoin ETF flows amid widespread “disinterest” in crypto, Needham says
According to Needham, registered investment advisors will likely be the primary driver of Bitcoin ETF flows if one is approved in the US. However, a survey conducted by the firm shows that retail customers show little to no interest in crypto investments. With market expectations that the first spot Bitcoin ETF could be approved in the US in January, Needham wanted to find out whether investors could gain Bitcoin exposure through an ETF, crypto-related stocks or trusts, or by purchasing the cryptocurrency directly on a trading platform such as Bitcoin . B. would prefer Coinbase or Robinhood. 20 financial advisors, 75 Coinbase users and more than 200 individuals were surveyed. According to the findings, the potential ETF would be best suited for advisors, given their limited ability to offer Bitcoin exposure to clients today. “The main driver of a Bitcoin ETF, in our view, will be RIAs,” said Needham analyst John Todaro. “With almost half of our advisors responding that their current Bitcoin offering either doesn’t exist or directs clients to buy Bitcoin themselves on a crypto platform, we assume that’s where most new buyers would come from.” The majority the advisor estimates that only 5 to 10% of clients own a Bitcoin ETF when it is available. “Advisors are currently largely seeing client disinterest in Bitcoin and an ETF, but almost all expect interest to increase if Bitcoin prices continue to rise,” Todaro added. Despite suffering a 7% decline earlier in the week, the cryptocurrency rebounded in the fourth quarter as calls for a Bitcoin ETF grew louder. Investors are also looking forward to the Bitcoin halving in the spring, which is expected to drive Bitcoin price higher in the following months. And the Federal Reserve's announcement on Wednesday that there could be at least three rate cuts in 2024 only adds to the recent enthusiasm. Bitcoin is up 59% in the last two months and is up 157% in 2023. BTC.CM= YTD Mountain Bitcoin (BTC) has gained more than 150% this year. People are unlikely to buy Bitcoins anymore just because an ETF is available. “It’s unlikely that anyone who hasn’t bought Bitcoin before will buy a Bitcoin ETF at this point,” Todaro said. “Only 11% of respondents who have not owned Bitcoin in the past said they were very likely or somewhat likely to buy a Bitcoin ETF.” At the same time, more (49%) of existing Bitcoin holders said that they would rather buy their crypto on an exchange like Coinbase than through a potential ETF (40%). The difference is small but bodes well for Coinbase, which has custodial partnerships with several potential Bitcoin ETF issuers but generates higher revenue from trading, Todaro noted. That leaves the outlook for Robinhood, which offers stock and crypto trading, mixed as the company sees a higher adoption rate for Bitcoin transactions than for stocks. —CNBC's Michael Bloom contributed reporting.
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