Ric Edelman, founder of the nation’s largest RIA, said Independent Financial Advisors will invest $150 billion in spot bitcoin ETFs over the next two to three years, making these ETFs the most successful launch in ETF history.
“Our research shows that 77% of independent advisors plan to allocate an average of 2.5% of clients’ portfolios to spot bitcoin ETFs,” Edelman said. Since Independent Registered Investment Advisors collectively manage $8 trillion, that translates to $154 billion.”
Edelman believes bitcoin’s price will reach $150,000 within two years, a nearly 3x increase from its current price. Still, Edelman urges advisors to temper their enthusiasm because, he said, flows into the new ETFs, and increases in bitcoin’s price, will not occur immediately.
“It’s going to take time for asset flows to occur,” Edelman said. “Firms need time to put these new ETFs onto their platform, and compliance departments need to establish policies governing their use. Advisors all need training, because most are unfamiliar with blockchain technology, and they don’t know how to explain bitcoin to clients.” Edelman created the Digital Assets Council of Financial Professionals in 2015 to teach advisors about crypto. Three years ago, DACFP launched the CBDA professional designation, an online course that allows advisors to become Certified in Blockchain and Digital Assets.
“Advisors are also going to need time to tackle the big tactical questions,” Edelman said. “Advisors have to determine which of their clients should invest in these ETFs, and determine the best allocation for them. Advisors need to decide how they’ll communicate their recommendation to clients.”
All this will take time, he said, and that’s why he’s encouraging advisors to have realistic expectations about the new spot bitcoin ETFs.
“In the long-term, I fully expect bitcoin’s price to be in the low to middle six figures,” Edelman said, “but it won’t happen overnight. This makes bitcoin an outstanding addition to a long-term diversified portfolio, using all the traditional investment strategies you’ve mastered over the years, such as rebalancing, dollar cost averaging and tax-loss harvesting. But triple-digit gains instantly? Everyone needs to temper their enthusiasm.”
DACFP has created a complete spot bitcoin ETF Toolkit for financial advisors. It includes a chart comparing all the ETFs so that advisors can easily decide which ones they want to add to their client portfolios. It’s available free at dacfp.com/toolkit.
