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

Trade-traded fund buyers are getting much more fascinated by cryptocurrency publicity — and the appearance of issues like bitcoin futures ETFs might result in a requirement explosion, one CEO says.

“The celebs are aligning proper now for demand for crypto allocation within the advisor neighborhood once you take a look at 30 years of declining rates of interest and … what that does to your fixed-income allocation,” ETF Tendencies CEO Tom Lydon informed CNBC’s “ETF Edge” this week.

“With inflation, with the demand for various investments and the present pattern within the cryptocurrency space, there’s plenty of strain on advisors to take a stake,” he mentioned within the Monday interview.

Eighty-one % of economic advisors mentioned they obtained questions on crypto in 2020, up from 76% in 2019, in a survey performed by Bitwise Asset Administration and ETF Tendencies. The variety of advisors who allotted to crypto of their purchasers’ portfolios rose to 9.4% from 6.3%, the survey discovered.

With ProShares and Valkyrie Funds’ new bitcoin futures ETFs already making waves, such merchandise may very well be the important thing to unlocking trillions of {dollars} in investor demand, Lydon mentioned.

“There’s this complete center market the place monetary advisors handle about $20 trillion that basically do not have one of the best answer proper now. And proper now, it seems that the futures-based ETF could be that,” he mentioned. “That is actually the place the lion’s share of the demand will likely be coming.”

The U.S. ETF market presently accounts for roughly $6.5 trillion in belongings beneath administration. The crypto alternative for ETF suppliers and advisors alike is substantial: a $2 trillion market with 200 million customers.

Add to that bitcoin’s perceived hedging energy in opposition to rising inflation — 25% of advisors noticed it as an inflation hedge within the Bitwise/ETF Tendencies’ survey this yr, up from simply 9% final yr — and international locations resembling El Salvador adopting it as foreign money, and the crypto craze is probably going nonetheless within the early innings, Lydon mentioned.

“There are extra people who wish to get bitcoin of their palms indirectly and it does not appear to be waning anytime quickly,” he mentioned.

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