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Despite the initial enthusiasm surrounding Bitcoin ETFs, financial advisors appear to be taking a cautious approach, according to analysts.
The launch of these regulated funds was largely driven by the need to provide a safe investment avenue for wealthy clients interested in Bitcoin. However, six months after launch, the expected popularity among advisors for these funds has yet to materialize.
Many advisors remain skeptical of Bitcoin now, as they were before the launch of ETFs. However, this does not mean that ETFs have failed. On the contrary, Bitcoin ETFs have been lauded as some of the most successful ETF launches in history.
Lee Baker, founder and president of Apex Financial Services in Atlanta, is among those still undecided. “It's something I'm looking into because I think eventually I'll recommend it, I'm just not there yet,” he said. “For myself and other advisors, if we have more background information, it's more likely to find its way into client portfolios.”
A recent CNBC survey of a dozen members of the Advisory Council, including Baker, sought to understand why many financial planners are still hesitant about BTC and Bitcoin ETFs. The consensus points to two main factors: time in the market and regulatory compliance.
Ted Jenkin, founder and CEO of oXYGen Financial in Atlanta, believes increased regulation will lead to broader adoption of Bitcoin. “However, even without regulation, if over time this can prove to be as stable an asset as a tech firm, because my perspective on this is that this is early technology rather than money, you will see greater adoption,” he said.
Interestingly, most advisors neither initiate conversations nor take questions from clients about ETFs. In fact, most advisors have very few clients who have allocations to funds. While some advisors are keeping themselves informed about Bitcoin investing, others are more dismissive, especially those with older, more traditional and conservative client bases.
Despite the current volatility, many are hopeful that steady flows into Bitcoin ETFs over the years can reduce this volatility.
Bradley Klontz, managing director of YMW Advisors, said: “Financial advisors now have a way to provide their clients with access to safe, secure and regulated Bitcoin. I love it…it's a tool in our toolbox for clients who want it. I don't see most firms recommending it right now because “They do not recommend any asset class or any particular asset with this much volatility.” said.
Rianka Dorsainvil, co-founder and co-CEO of 2050 Wealth Partners, echoed similar sentiments, noting that most of her clients prioritize stability and long-term growth over high-risk opportunities. “The primary factors keeping Bitcoin ETFs out of investment strategies are Bitcoin ETFs,” she said. “The relatively early stage of trading in the financial landscape and the ongoing volatility associated with Bitcoin.”
*This is not investment advice.