One CEO claims that exchange-traded fund investors have become more interested in cryptocurrency exposure. The advent of ETFs like bitcoin futures ETFs could spark a surge in demand.
ETF Trends CEO Tom Lydon said that the stars are aligning for demand for crypto allocations in advisor communities when you consider 30 years of falling interest rates and... how that affects your fixed-income allocation." Lydon spoke to CNBC's "ETF Edge" on Wednesday.
He said that advisors are under pressure to buy a stake in inflation and other investments due to the current trend in cryptocurrency.
A survey by Bitwise Asset Management (ETF Trends) found that 81% of financial advisors reported receiving questions about crypto in 2020. This is an increase from 76% in 2019. According to the survey, 9.4% of advisors allocated crypto to their clients' portfolios compared to 6.3%.
Lydon stated that the new ProShares and Valkyrie Funds bitcoin futures ETFs are already making waves. These products could help unlock trillions in investor demand.
"There is a whole middle market in which financial advisors manage $20 trillion, but they don't really have the best solution at the moment. He said that it seems that the futures-based ETF may be that. "That's where the lion’s share of the demand is going to be."
The U.S. ETF Market currently manages approximately $6.5 trillion in assets. ETF advisors and providers of ETFs have a significant opportunity to offer crypto services: there is a $2 trillion market, with 200 million users.
Lydon stated that bitcoin's perceived ability to hedging against rising inflation is what 25 percent of advisors viewed it as in the Bitwise/ETF Trends survey this year. El Salvador has also adopted it as a currency. The crypto craze may still be in its infancy.
He stated that "there are more people who want bitcoin in their hands in any way and it doesn’t seem to be decreasing anytime soon."
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