$20 trillion of managed cash may drive ETF demand, CEO says

Trade-traded fund buyers are getting much more serious about cryptocurrency publicity — and the arrival of issues like bitcoin futures ETFs may result in a requirement explosion, one CEO says.

“The celebrities are aligning proper now for demand for crypto allocation within the advisor group whenever you take a look at 30 years of declining rates of interest and … what that does to your fixed-income allocation,” ETF Tendencies CEO Tom Lydon instructed CNBC’s “ETF Edge” this week.

“With inflation, with the demand for various investments and the present development within the cryptocurrency space, there’s quite a lot of stress on advisors to take a stake,” he mentioned within the Monday interview.

Eighty-one % of monetary advisors mentioned they acquired questions on crypto in 2020, up from 76% in 2019, in a survey carried out by Bitwise Asset Administration and ETF Tendencies. The variety of advisors who allotted to crypto of their purchasers’ portfolios rose to 9.4% from 6.3%, the survey discovered.

With ProShares and Valkyrie Funds’ new bitcoin futures ETFs already making waves, such merchandise may very well be the important thing to unlocking trillions of {dollars} in investor demand, Lydon mentioned.

“There’s this entire center market the place monetary advisors handle about $20 trillion that basically do not have one of the best resolution proper now. And proper now, it seems that the futures-based ETF may be that,” he mentioned. “That is actually the place the lion’s share of the demand might be coming.”

The U.S. ETF market at present accounts for roughly $6.5 trillion in property underneath administration. The crypto alternative for ETF suppliers and advisors alike is substantial: a $2 trillion market with 200 million customers.

Add to that bitcoin’s perceived hedging energy towards rising inflation — 25% of advisors noticed it as an inflation hedge within the Bitwise/ETF Tendencies’ survey this yr, up from simply 9% final yr — and international locations reminiscent of El Salvador adopting it as forex, and the crypto craze is probably going nonetheless within the early innings, Lydon mentioned.

“There are extra people who wish to get bitcoin of their arms indirectly and it would not appear to be waning anytime quickly,” he mentioned.

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