Hougan Expects Bitcoin ETF Inflows Again

With the spot bitcoin ETF launch complete, analysts expect adviser and institutional investor acceptance to boost fund inflows.

Bloomberg data shows that the unique spot bitcoin ETFs have raised $3.2 billion since mid-January, making it the fastest-growing launch ever.

Matt Hougan, chief investment officer of Bitwise Asset Management, expects another wave of inflows when the funds go onto broker-dealers' systems and are embraced by institutional investors.

“I actually think there’s going to be a secondary acceleration in the next few months when the [spot bitcoin ETFs] get on national account platforms,” Hougan said on a panel at the ETF Exchange Conference in Miami on Feb. 13.

After more than a decade of application, Bitcoin ETFs were issued Jan. 10. Issuers hold the cryptocurrency. On Jan. 11, 11 businesses established funds, starting a fee and marketing war that continues. The iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) have the greatest assets, whereas Grayscale's Bitcoin Trust ETF (GBTC) has lost billions owing to its hefty fee.

Several large asset managers, including Vanguard, will not trade the ETFs. On the panel, Hougan indicated Vanguard may reconsider rejecting bitcoin and other cryptocurrencies.

Executives said winning over financial advisors and institutional clients will unlock the floodgates. “Some are going to be fast followers, and some are going to be slower if they even adopt,” Grayscale Global Head of ETFs David LaValle told the panel. Hougan projected that even crypto-allocated financial advisers will invest 1% to 5% of their portfolio.

Moderator and Bloomberg ETF analyst Eric Balchunas asked LaValle what "the deal" was with GBTC's hefty fees. The expenditure ratio is 1.5%, whereas rivals are 20-to-30 basis points. LaValle acknowledged the issue was “fair” but added that investors also consider liquidity and ETF track record.

Ethereum ETF, the next cryptocurrency ETF regulatory struggle, Hougan, LaValle, and Galaxy's Global Head of Asset Management Steve Kurz all envision 50/50 odds of approval before the SEC's May deadline.

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