$ 20 trillion in managed money could boost demand for ETFs, CEO says

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Investors in exchange-traded funds are increasingly interested in exposure to cryptocurrencies – and the advent of things like bitcoin futures ETFs could cause demand to explode, a CEO said.

“The stars are aligning with the demand for crypto allocation in the advisor community right now when you look at 30 years of falling interest rates and… what that does to your fixed income allocation,” said ETF Trends CEO Tom Lydon told CNBC. “Edge” this week.

“With inflation, with the demand for alternative investments and the current trend in cryptocurrency, there is a lot of pressure on advisers to take a stake,” he said in Monday’s interview.

Eighty-one percent of financial advisers said they received questions about crypto in 2020, up from 76% in 2019, in a survey conducted by Bitwise Asset Management and ETF Trends. The number of advisers who allocated crypto in their clients’ wallets fell from 6.3% to 9.4%, according to the survey.

With the new bitcoin futures ETFs from ProShares and Valkyrie Funds already making waves, these products could be the key to unlocking trillions of dollars in investor demand, Lydon said.

“There’s this whole middle market where financial advisers manage around $ 20 trillion that really doesn’t have the best fit right now. And at the moment it looks like the futures ETF could be that,” did he declare. “This is really where the lion’s share of the demand will come from.”

The US ETF market currently represents approximately $ 6.5 trillion in assets under management. The crypto opportunity for ETF providers and advisers is substantial: a $ 2 trillion market with 200 million users.

Add to that the perceived hedging power of bitcoin against rising inflation – 25% of advisers rated it as an inflation hedge in the Bitwise / ETF Trends survey this year, down from just 9% in the past. last year – and countries like El Salvador adopted it as a currency, and the crypto craze is probably still in its infancy, Lydon said.

“There are more and more people who want to get bitcoin into their hands one way or another and it doesn’t seem to be weakening anytime soon,” he said.

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