Bitcoin ETFs Gear Up To Welcome Over 500 Advisors In May: Bloomberg Analyst

Eric Balchunas, Senior ETF analyst at Bloomberg, has weighed in on the ongoing discussion surrounding the institutional adoption of Spot Bitcoin ETFs in the U.S. His comments come in response to the skepticism expressed by Jim Bianco, who he believes not many investment advisors will invest in the Bitcoin ETFs.

Bitcoin ETFs Will Witness A Slew Of 13F Filings In May

Replying to Bianco’s post, Balchunas highlighted the growing interest among investment advisors in Bitcoin ETFs. In addition, he underscored that hundreds of 13F filings are yet to be reported, which could unveil a host of institutional advisors who chose Bitcoin ETFs. He stated, “The majority of 13Fs have yet to roll in and there are already something like 150 advisors (from all over the country) that have reported owning a spot ETF.”

Moreover, the Bloomberg analyst went on to predict a significant increase in the number of advisors reporting ownership by May 15th, potentially exceeding 500 advisors. This surge in advisor interest, according to Balchunas, would “blow away any records for the first 3 months on the market.”

He also addressing Bianco’s concerns about the relatively low participation of investment advisors in Spot Bitcoin ETFs compared to other ETFs. Balchunas acknowledged that while advisors have been mostly nibbling at these ETFs, he anticipates more substantial investments over time. He pointed out that historically, it’s not uncommon for new ETFs to have minimal advisor participation in their first quarter with significant adoption typically occurring over the first year.

Balchunas cautioned against dismissing the potential of Bitcoin ETFs. In addition, he advised against “dying on this hill” as it involves going against major financial players like BlackRock, Fidelity, and Invesco. Furthermore, he emphasized the influence of these institutions’ wholesaling firepower, relationships, and advisors’ loyalty to their ETF products.

In addition, Balchunas spotlighted that ProShares Bitcoin Strategy ETF (BITO) also gradually attracted institutional adoption. He wrote, “BITO is 40% owned by advisors, but that took time, these will prob end up at that spot in time.”

Also Read: Hong Kong Spot Bitcoin ETF Success Rests On Asian Crypto Users

Jim Bianco’s Arguments

In the recent analysis, Bianco noted that investment advisors collectively hold approximately 35% of all ETFs. However, their stake in the newly launched Spot Bitcoin ETF is markedly low, accounting for less than 1%. This stark contrast underscores Bianco’s concern that Bitcoin ETFs are predominantly utilized by “paper-handed small-time traders,” colloquially referred to as “degens.”

These retail investors, according to Bianco, are nearing their breakeven points. Moreover, he caution that this poses a significant risk of mass selling should market conditions turn unfavorable. Bianco supported his argument with data from a Citi study. The report reveals that the vast majority of Bitcoin ETF holders are not institutional investors or wealth managers with assets exceeding $100 million.

Instead, they primarily consist of retail traders and hedge funds, whose filings are still pending. Furthermore, Bianco pointed out the notably small average trade size in Bitcoin ETFs, averaging around $14,000, indicative of retail investors’ participation and inclination toward chasing momentum chasing. He warned that this behavior could expedite market volatility.

Moreover, the effects could be worse if prices dip below the average purchase price, prompting retail investors to sell en masse. Despite his reservations, Bianco emphasized his support for the concept of Bitcoin ETFs as part of the digital asset toolbox. However, he cautioned against overly relying on ETFs as “orange FOMO poker chips.” He noted that it could distract from the broader goal of establishing alternatives to traditional financial systems.

Also Read: Spot Bitcoin ETF Coming to Australia’s Stock Market by End of 2024