Financial Advisors Rally Behind Crypto ETFs at Exchange Conference
Las Vegas—In a notable shift towards embracing cryptocurrency investments, financial advisors across the United States are increasingly committing to crypto exchange-traded funds (ETFs) and are poised to enhance their allocations in the upcoming year. This sentiment was highlighted during a recent presentation at the Exchange conference in Las Vegas, where Todd Rosenbluth, head of research at TMX VettaFi, along with senior investment strategist Cinthia Murphy, unveiled compelling findings from a survey distributed to thousands of financial advisors nationwide.
The survey revealed that an impressive 57% of advisors intend to boost their investments in crypto ETFs, while 42% plan to maintain their current positions. Remarkably, only 1% expressed a desire to reduce their crypto holdings. “Last year, the prevailing sentiment was that engaging with crypto posed a reputational risk. Today, every advisor must be equipped to have at least a foundational conversation about cryptocurrencies,” Murphy remarked.
In a significant development, the U.S. Securities and Exchange Commission (SEC) approved spot bitcoin ETFs in January 2024, marking a pivotal moment in the regulatory landscape. This approval comes amid a backdrop of shifting attitudes towards cryptocurrency under the administration of former President Donald Trump, whose tenure has been characterized by a newfound enthusiasm for the crypto sector. The SEC and the Commodity Futures Trading Commission (CFTC) have notably softened their stance on cryptocurrency regulation, paving the way for wider institutional adoption.
Survey participants indicated a growing interest in crypto equity ETFs, which are investment funds that target publicly traded companies with significant exposure to the crypto market, including firms like Strategy (formerly MicroStrategy) and Tesla. “Keeping pace with developments in this fast-evolving space can be challenging, which likely explains the popularity of crypto equity investments. They offer an easier entry point for many investors,” Murphy added.
Since Trump’s rise to the presidency, shares of Michael Saylor’s MSTR stock have surged by over 100%, making crypto-linked equities increasingly appealing to both retail and institutional investors alike. Although MSTR shares have experienced some volatility and have retraced from their all-time highs, the survey results suggest sustained interest from diverse market segments.
Spot and Multi-Token ETFs Gain Traction
In addition to crypto equity-linked ETFs, financial advisors are also showing interest in other types of cryptocurrency investments. Approximately 22% of respondents indicated they are looking to allocate capital to spot crypto ETFs, which encompass investments in assets like spot bitcoin (BTC) and spot ether (ETH). Furthermore, about 19% of advisors expressed interest in crypto asset funds that hold a diversified range of tokens.
The ETF landscape is rapidly expanding, with numerous crypto ETFs currently trading on exchanges and many more awaiting SEC approval. Recent months have seen a surge in index-based ETFs, which typically consist of a diverse basket of crypto assets beyond just bitcoin and ether. Some innovative launches include managed funds designed to provide downside protection against price volatility by allocating a portion of investments into U.S. Treasuries, for example.
Several issuers are actively filing for additional spot crypto ETFs, including those focusing on Solana (SOL), XRP, and Litecoin (LTC), although the SEC has yet to review these proposals. “This is an industry that is only set to grow further, and I strongly encourage you to familiarize yourself with the experts in the field, as developments are occurring rapidly and there is much to learn,” Murphy concluded.
Cheyenne Ligon contributed to this report.
