Today, the Director of Digital Assets at BlackRock, Robert Mitchnick, discussed at the Bloomberg ETF IQ what truly fuels the escalation of Bitcoin ETFs.
“It’s a multitude of factors coming together. Initially, there was significant retail and investor interest…” Mitchnick remarked. “More recently, we’ve observed consistent advancement in wealth advisor adoption and increased institutional buy-in. There’s a combination of first-time investors entering the crypto realm, alongside many seasoned Bitcoin investors who are now leveraging the ETP structure.”
Regarding institutional acceptance, Mitchnick indicates that we remain in the initial stages. ETF authorizations typically span several years, yet some companies are expediting the timeline.
“We’ve noticed this expedited by multiple companies, and when we mention fast tracking,” Mitchnick explained. “We’re referring to, you know, quarters, not months. Gradually, we’ve observed, particularly over the last few months, an increase in prominent firms lowering barriers and permitting their advisors to utilize these.”
Bitcoin’s fluctuations have lessened lately, rendering it more attractive to institutions pursuing diversification. Despite still being volatile, its risk-return profile distinguishes itself from traditional assets.
“There’s no doubt it’s a relatively innovative technology,” commented Mitchnick. “Although volatility has decreased, it remains variable. However, its risk and return determinants are significantly different from most conventional portfolio assets, which is crucial. Hence, when institutions evaluate this, they intensely focus on that correlation, particularly if it trends towards zero or even occasionally negative, as this makes the portfolio construction argument very compelling.”
Approximately a dozen Bitcoin ETFs are presently vying in the marketplace, and the demand stays robust.
“Well, many of them have been, you know, quite successful too,” Mitchnick noted. “Clearly, it has led in the category by a considerable margin. Yet, there’s been such demand that it’s been thrilling, and there are numerous products available in the space, which is advantageous.”