Expectations for Spot Bitcoin ETF Inflows Soar, Poll Finds

Expectations for Spot Bitcoin ETF Inflows Soar, Poll Finds

As billions flow into spot bitcoin ETFs, expectations continue to rise.

Wealth Management Editor
Reviewed by: etf.com Staff
Edited by: James Rubin

Bitcoin is up about 40% over the past month, hovering above $60,000 for the first time since late 2021, but a number of cryptocurrency experts say this is just the beginning of an extended rally now that investors have access to spot bitcoin ETFs.

“There’s never been an ETF that has been launched where the demand for the ETF materially affects the price of the underlying asset,” said Adam Blumberg, co-founder of Interaxis, a firm that provides cryptocurrency and blockchain education for financial advisors.

“We know how much bitcoin there is, and we know how much there will ever be,” he added. “Every time you buy one share of an ETF, they have to go buy bitcoin, which drives up the price, which drives up demand.”

While there are other drivers behind the current bitcoin price rally, including the scheduled halving of the cryptocurrency in April, Blumberg believes the scenario is unfolding as expected since the 10 spot bitcoin ETFs started trading Jan. 11.

In less than two months, those funds have grown to more than $43 billion in combined assets, representing more than $6.7 billion worth of inflows, bitcoin price appreciation and the Grayscale Bitcoin Trust (GBTC) conversion from a closed-end fund to a traditional ETF.

GBTC, which has the highest expense ratio of the spot bitcoin ETFs at 1.5%, saw nearly $7.6 billion in outflows this year through Feb. 27.

The massive inflows are clearly altering perspectives on how big this unprecedented ETF launch could become, based on polling by etf.com.  

Bullish on Bitcoin

In a non-scientific, social media poll on Jan. 19, the largest percentage of respondents (38%) said they expected the new ETFs to see inflows of between $5 billion and $10 billion over the next 12 months.

But in a similar poll on Tuesday, the largest percentage of respondents (31%) said they expect to see inflows of between $20 billion and $30 billion.

Jim Crider, founder of the financial planning firm Intentional Living FP, said he expects the ETFs to accumulate more than $50 billion this year.

“I’m very conflicted when it comes to crypto because that’s all I own,” he said. “I’m open with my clients about how I’m invested, but I tell them they probably shouldn’t do what I do.”

But even if Crider’s clients aren’t following in his footsteps, most of them aren’t far behind, with average client portfolios allocating 35% to cryptocurrencies and crypto related companies like miners.

While he doesn’t describe it as a white-knuckle ride, Crider is guiding his clients through an aggressive approach to investing.

“Last February, when bitcoin was around $20,000 and my average client had 10% to 20% in bitcoin, I told them to really go heavy on bitcoin and slow other investments into 401(k) plans and other accounts. They all went to between 20% and 30% allocations to bitcoin.”

Crider said his crypto-heavy discretionary portfolio gained more than 300% last year.

Ric Edelman, founder of the Digital Assets Council of Financial Professionals, expects financial advisors to increasingly join the crypto party now that ETFs make it easy and accessible.

“Independent RIAs will place $150 billion into these ETFs over the next two years,” he said. “Add flows from wirehouses, institutional investors and retail investors, coupled with price gains, and these ETFs could easily be worth more than $1 trillion by the end of the decade and possibly much sooner. What we’ve seen so far is just the beginning.”

Blumberg of Interaxis is equally bullish on bitcoin but also appreciates why all financial advisors aren’t embracing crypto investing with the same zeal as Crider.

“If you asked me in January, even before the ETFs were approved, I’d have said there will be $75 billion to $100 billion worth of inflows this year, because I think there’s way more pent-up demand then people realize,” he said. “But advisors have 100,000 arrows in their quiver and taking the time and expense to learn crypto is a lot for a small allocation.”

Blumberg said the price rollercoaster has not helped get advisors on board.

“In 2021 when bitcoin was heading toward an all-time high, advisors were falling over themselves to learn about it, then things started falling off the rails over and over again,” he said, referencing the high-profile collapse of cryptocurrency exchange FTX, among other things.

“By November of 2022, bitcoin was down to $15,000, and it looked like the government was going to regulate it out of existence in the U.S.,” Blumberg said. “As of November of last year, 39% of advisors still didn’t think a bitcoin ETF would ever be approved.”

Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.