Professional Investors Increasing Bitcoin Allocation to 3%: Bitwise CIO
According to Bitwise CIO Matt Hougan, discussions with professional investors revealed that 3% is now the new 1% when it comes to allocating to Bitcoin. In the past, most investors would only consider a 1% allocation to Bitcoin. However, recent conversations with investors have shown a shift towards a 3% or higher allocation. This change is largely attributed to the launch of U.S. spot Bitcoin exchange-traded funds (ETFs), which have helped de-risk Bitcoin’s downside.
- 3% allocation more common
- Shift driven by U.S. spot Bitcoin ETFs
- Inflows into Bitcoin ETFs indicate sustained demand
Bitcoin ETF Inflows Reflect Long-Term Demand
The net inflows into U.S. spot Bitcoin ETFs, totaling around $11.7 billion just over two months since their launch, highlight a long-term sustained demand for Bitcoin. Hougan noted that the pace of adoption of Bitcoin ETFs varies significantly among financial advisors. Some have already allocated 3% to all their clients, while others have yet to consider it.
- Net inflows into Bitcoin ETFs
- Significant dispersion in adoption
- Long-term demand for Bitcoin
Bitcoin Allocation Rebalancing Impact on Market Volatility
When asked about the impact of rebalancing Bitcoin allocations as the price fluctuates on market volatility, Hougan predicted that it would slightly dampen volatility. He explained that more current Bitcoin buyers are likely to rebalance their allocations compared to buyers from previous cycles, which could lead to a more stable asset price.
- Rebalancing expected to reduce volatility
- Different buyer behavior in current cycle
- First wirehouse support for Bitcoin ETFs anticipated
Bitwise’s Spot Bitcoin ETF
Bitwise is one of the 11 spot Bitcoin ETF providers in the U.S., with its BITB product ranking fifth in terms of assets under management, totaling around $2 billion. Recent data shows that spot Bitcoin ETFs experienced a significant increase in net inflows, with Bitwise’s ETF having a particularly successful day. Other providers, such as Tidal and Hashdex, have also announced the trading of their Bitcoin ETFs.
- Bitwise among top spot Bitcoin ETF providers
- Positive net inflows for Bitwise ETF
- Tidal and Hashdex commence trading of Bitcoin ETFs
Hot Take: Future of Bitcoin Investments
Overall, the increasing allocation to Bitcoin among professional investors, driven by the availability of U.S. spot Bitcoin ETFs, indicates a significant shift in the investment landscape. This change is expected to continue in the coming years, with Bitcoin potentially becoming a more mainstream investment option. As the market evolves, new opportunities and challenges will likely emerge, presenting both risk and reward to investors looking to capitalize on the growth of the cryptocurrency market.
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