Matt Hougan, CIO of Bitwise, offers a bullish outlook on Bitcoin's price prospects in my interview with him yesterday (HERE). His insights come from a recent 20-day roadshow where he met with clients across various regions.
RIAs Embrace Bitcoin:
The launch of spot Bitcoin ETFs like Bitwise's BITB has significantly impacted the Registered Investment Advisor (RIA) market. By establishing itself as a reliable source of information and education for RIAs, Bitwise has distinguished itself within the competitive landscape.
The success of their $2 billion AUM BITB ETF is a testament to this effective strategy. These advisors, who influence the investment strategies of 40% of American wealth, are now actively discussing Bitcoin allocations with their clients and are a significant source of the record demand for spot Bitcoin ETFs. Notably, portfolio weighting recommendations are rising from an average of 0-1% prior to the January 11, 2024 ETF launch date to a potential 3-5% from his discussions over the past few weeks.
This shift suggests a trend towards asset allocation rather than short-term trading, even with Bitcoin’s volatile price fluctuations from $50k to $40k and back to $70k, the RIA market has provided steady demand.
We discuss the Bitwise RIA survey (HERE) taken in Nov/Dec 2023 which revealed some fascinating statistics you may find worth reviewing. Some highlights:
only 39% of advisors thought a Bitcoin ETF would be approved in 2024
88% of advisors were interested in purchasing Bitcoin if an ETF were to be approved
only 19% of advisors were able to purchase Bitcoin for their clients
52% of advisors believed Bitcoin prices would be higher in one year, 64% over 5 years
As of yesterday, $12.0B of net assets have been accumulated by the 11 Bitcoin ETFs since launch and from the above % ownership by advisors, it is easy to see why. Note that 88% of advisors had fielded questions about crypto from their clients, but 75% were from less than 10% of clients. The large and steady inflows into the ETFs would suggest that client interest has likely surged.
Further Growth Expected:
While independent RIAs currently dominate the market, Matt anticipates further adoption from advisors at many major firms like Morgan Stanley, Bank of America, Fidelity and many others that represent another 30% of US wealth. He predicts approvals and portfolio allocation recommendations for Bitcoin before year-end.
Beyond Price: Bitcoin's Impact:
Matt also addressed the broader question of Bitcoin's real-world value. He emphasizes its benefits at both macro and micro levels, with individual owners determining the best use cases. However, he highlights the immediate impact Bitcoin offers in countries with rampant currency devaluation. Bitcoin provides a solution to real-world survival, a means to protect savings, and creates long-term demand of a more urgent nature than in the US.
Conclusion:
Matt Hougan's insights paint a promising picture for Bitcoin's future, with growing institutional adoption and a recognition of its real-world value driving demand over the long run.