According to Blockworks, net inflows into US spot bitcoin ETFs have reached over $1.2 billion, a figure expected to grow exponentially as more investment professionals allocate funds to them. However, Alex Thorn, head of research at Galaxy Digital, believes that the primary market for spot bitcoin ETFs, particularly the wealth management sector, needs more time before investing client capital. Thorn estimates that the wealth management sector controls $48 trillion in assets, with most of it affiliated with banks or broker-dealers that have not yet added bitcoin ETFs to their investment options.
A survey conducted by Bitwise and VettaFi in late 2021 revealed that approximately 80% of financial advisers were either unable to buy crypto for clients or unsure if they could. Among those interested in adding bitcoin exposure to client portfolios, nearly 90% were waiting for a spot bitcoin ETF to be approved. Ric Edelman, founder of Edelman Financial Services and the Digital Assets Council of Financial Professionals, expects financial advisers to allocate more than $150 billion into spot bitcoin ETFs within the next two years.
Ten spot bitcoin ETFs were launched on January 11, with BlackRock and Fidelity funds leading the pack with over $2 billion in net inflows each. However, outflows from Grayscale Investments' Bitcoin Trust ETF (GBTC) have tempered the sector's asset gains. Edelman predicts that BTC funds will be available on wealth manager platforms within the next six to 12 months, allowing advisers to allocate them on behalf of clients.
Ryan Rasmussen, senior crypto research analyst at Bitwise, noted that some wealth managers, particularly independent registered investment advisers (RIAs), are already investing in crypto products, with allocations ranging between 1% and 5%. Rasmussen believes that if spot bitcoin ETFs captured 1% of all ETF assets in the US, it would result in more than $70 billion of assets under management in spot bitcoin ETFs, a figure he considers very reachable.
