Financial Advisors Must Confront the Likely Spot Bitcoin ETF Crush
With spot bitcoin ETFs, traditional financial advice is colliding with crypto investing realities.
With the first spot bitcoin ETF seemingly just a breath away, the financial advisory space should be either up to speed or scrambling to catch up with an inevitable rush of client curiosity .
Whether you’re already on the cryptocurrency bandwagon, have sworn off it or are somewhere in between, ignoring the significance of a new asset class wrapped inside an exchange-traded fund that individual investors can purchase with or without a financial representative will be impossible.
That should be enough of a wake-up call, but if it’s not, there’s also the fact that bitcoin’s price is now hovering around $47,000, which is up 170% over the past 12 months.
Naysayers and skeptics have a legitimate counterpoint to a rally that’s riding the homestretch of a spot bitcoin ETF decision, noting that bitcoin is still down more than 25% from its all-time high of nearly $70,000 two years ago. And at one point a year ago, the digital currency was trading 76% below its peak as investors reeled from multiple crypto industry scandals and regulatory uncertainty, particularly in the U.S.
That volatility could cause the financial planning industry to pause, from the largest brokerage firms to the smallest sole proprietor, if a spot bitcoin ETF launches. After so much hype and media attention, nobody in the business should be surprised at this point. But that doesn’t mean there won’t be some cautious due diligence layered on once the first ETF hits the street.
Advisors, Brokerages Face Reality of Spot Bitcoin ETFs
Several calls to the major brokerage firms, where compliance departments tend to be most muscular, received mostly predictable “no comment” responses when asked about advisor and client access to a spot bitcoin ETF.
The one exception was Charles Schwab Corp., which confirmed that a spot bitcoin ETF would be available on all platforms as soon as it is launched.
For those client-facing advisors the initial launch could represent an opportunity similar to initial public offerings, when big gains occur quickly. Those who hesitate could miss that sudden burst.
But even if the initial performance acts like an IPO, this is something different, and financial advisors acting as fiduciaries will have to find their own path to justify buying or not.
One thing is for certain, ignoring a spot bitcoin ETF won’t be an option.
Contact Jeff Benjamin at [email protected] and find him on X at @BenjiWriter
