$20 trillion of managed money could drive ETF demand, CEO says

Exchange-traded fund (ETF) investors are getting more and more interested in cryptocurrency exposure — and the emergence of things like bitcoin futures ETFs could drive demand, says one CEO.

“The stars are now aligned with the demand for crypto-allocation in the advisor community when you look at 30 years of low interest rates and…what that does to allocate your fixed income,” Tom Lydon, CEO of ETF Trends, told CNBC. edge” this week.

“With inflation, the demand for alternative investments, and the current trend in the crypto space, there is a lot of pressure on advisors to take a stake,” he said in an interview on Monday.

Eighty-one percent of financial advisors said they received questions about crypto in 2020, up from 76% in 2019, in a survey conducted by Bitwise Asset Management and ETF Trends. The survey found that the number of advisors assigned to cryptocurrencies in their clients’ portfolios rose to 9.4% from 6.3%.

With Proshares and Valkyrie Funds new ETF futures already in place, these products may be the key to unlocking trillions of dollars of investor demand, Lydon said.

“There is a whole mid-market in which financial advisors are managing about $20 trillion and they really don’t have the best solution right now,” he said. “At the moment, it looks like a futures-based ETF might be like that.” “This is where the lion’s share of the demand will come in.”

The US ETF market currently represents approximately $6.5 trillion in assets under management. The crypto opportunity for ETF providers and advisors alike is huge: a $2 trillion market with 200 million users.

Add to the perceived power of bitcoin’s hedge against rising inflation — 25% of advisors saw it as an inflation hedge in this year’s Bitwise/ETF Trends survey, up from just 9% last year — and countries like El Salvador are embracing it as a currency, Lydon said. Probably still in its infancy.

“There are more people who want to get their hands on bitcoins in some way and it doesn’t look like it’s going to diminish any time soon,” he said.

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