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Financial Advisors Be Wary of Investing in Spot Bitcoin ETFs, Says BlackRock Exec
Samara Cohen, BlackRock’s chief investment officer for index investing, recently suggested that amid the recent success of Bitcoin spot exchange-traded funds, financial investors are still exercising some caution when investing.
The volatility and early days of Bitcoin and related exchange-traded funds are key drivers of the slow adoption of this investment class.
Financial advisors are cautious
Since its debut in January 2024, spot Bitcoin ETFs have attracted massive investments from numerous individual and institutional investors, with the investment vehicle seeing over $15 billion in inflows. However, according to Samara Cohen, this fast moving The investment vehicle still has to convince financial advisors.
Cohen mentioned that according to last quarter’s 13-F filings, brokerages and hedge funds have been key participants and buyers in spot Bitcoin ETFs.
Speaking At the Coinbase State of Crypto Summit in New York on Thursday, she noted that about 80% of Bitcoin ETF purchases are made by self-directed investors using online brokerage accounts. However, registered financial advisors remained skeptical, with Cohen calling their position “wary.”
She believes financial advisors are only doing their job by expressing skepticism before investing. She said:
“An investment advisor is a fiduciary to his clients. This is an asset class whose prices have seen 90% volatility at times in history, and their job is really to construct portfolios, perform risk analysis, and make proof of due diligence. They’re doing it right now.
Due to the volatile nature of cryptocurrencies, Cohen believes that financial advisors must carefully analyze data and verify risks before deciding on the appropriate investment exposure based on the investor’s risk tolerance.
Blue Macellari, head of digital asset strategy at T. Rowe Price, shows that many view 1% as a safe and comfortable exposure. Another speaker, Alesia Haas, CFO of Coinbase, also noted that Bitcoin is “on a slow path to adoption.”
Volatility, infancy and regulatory uncertainty
According to Cohen, the inherent volatility Bitcoin, whose value has experienced significant fluctuations since its creation, is one of the main reasons for the skepticism displayed by financial advisors. Additionally, spot Bitcoin ETFs are still in their early stages and lack a track record, further contributing to advisors’ cautious stance.
The difficult regulatory environment has also been a discouraging factor, as regulators appear to be targeting crypto projects.
Despite all the drawbacks, Cohen maintains that Bitcoin ETFs can bridge the significant gap between cryptocurrencies and traditional finance, especially for investors wary of exposure to risk.