A Bitcoin ETF Isn’t Priced In: Report Finds Hard Evidence

Yesterday’s release of the “Bitwise/VettaFi 2024 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets,” has shed new light on the current state of Bitcoin and crypto investments. The survey, an annual affair now in its sixth year, explores a range of topics including advisors’ crypto allocations, investment vehicles, and BTC price predictions, uncovering a landscape marked by persistent client interest and significant barriers.

A Bitcoin ETF Is Not Priced In Yet – Here’s Why

One of the most striking findings of the survey of 437 financial advisors with an AUM from $ 1 million to over $100 billion, conducted from October 20 to December 18, 2023, is the expectation of a spot Bitcoin ETF approval. Contrary to the high likelihood projected by Bloomberg ETF analysts, only a minority (39%) of advisors believe that a spot BTC ETF will receive approval in 2024.

This perspective starkly contrasts with the broader market sentiment and highlights a notable gap in expectations. Despite this skepticism, a significant portion of advisors (88%) view the approval of a spot ETF as a major catalyst, indicating a latent demand that is yet to be activated in the market. “88% of said advisors interested in purchasing BTC are waiting until after a spot ETF is approved,” the survey found.

The survey also brings to light a significant barrier in the Bitcoin market: access. A mere 19% of advisors reported the capability to purchase BTC and crypto in client accounts. This limited access underscores the challenges faced by advisors in incorporating crypto assets into traditional investment portfolios. A spot Bitcoin ETF will change that.

A Bitcoin ETF is not priced in! @BitwiseInvest

39% of financial advisors believe a spot #Bitcoin ETF will be approved in ’24.

88% of advisors interested in purchasing $BTC are waiting until after a spot ETF is approved.

19% are currently able to buy in client accounts.

— Jake Simmons (@realJakeSimmons) January 5, 2024

Those who have ventured into crypto seem committed, with 98% planning to maintain or increase their crypto exposure in 2024. The survey also noted a marked increase in large crypto allocations in client portfolios, more than doubling from 22% in 2022 to 47% in 2023.

Furthermore, client interest in Bitcoin and cryptocurrencies remains high, as evidenced by 88% of advisors reporting crypto-related inquiries from their clients last year. Moreover, a notable proportion of advisors (59%) mentioned that their clients are investing in cryptocurrencies independently, indicating a significant interest in the asset class beyond the traditional advisory scope.

When it comes to preferences, advisors showed a clear leaning towards crypto equity ETFs for their 2024 allocations. Regulatory uncertainty (64%) and volatility (47%) continue to be the primary concerns hindering greater adoption of cryptocurrencies in portfolios. Interestingly, the survey revealed a strong preference for BTC over Ethereum among advisors, with 71% favoring the former, a considerable increase from the previous year’s 53%.

Matt Hougan, CIO of Bitwise, commented on these findings, stating, “The big takeaway from these advisors this year is that, for all the hoopla surrounding the potential approval of a spot Bitcoin ETF, it doesn’t appear to be priced in. There’s a massive gap in expectations between advisors and those who monitor ETF developments for a living. Couple that with the fact that almost 90% of advisors say they’re waiting for an ETF before making a Bitcoin investment, and you see a lot of demand bubbling just below the surface.”

In terms of market predictions, the survey revealed a cautiously optimistic outlook. More than half of the respondents (52%) believe the price of Bitcoin will be higher in a year, with the figure rising to 64% over a five-year horizon. However, expectations for Bitcoin to surpass its all-time high are modest in the short term (9%) but increase over the next five years (38%).

At press time, BTC traded at $43,687.

Featured image created with DALL·E 3, chart from TradingView.com