Advisors are ‘suspicious’ of Bitcoin ETFs, whose launch is progressing slowly, says a BlackRock executive

The long-awaited Bitcoin Exchange-traded funds (ETFs) were launched in January, and financial advisors are on target to adopt them, albeit steadily, in accordance with BlackRock's Samara Cohen.

Currently, about 80% of Bitcoin ETF purchases are likely coming from “self-directed investors who have made their own allocation, often through an online brokerage account,” she said on the Coinbase State of Crypto Summit in New York City on Thursday. The iShares Bitcoin Trust (IBIT) was certainly one of the funds that made its debut earlier this 12 months.

Cohen, BlackRock's chief investment strategist for ETFs and index investments, noted that based on last quarter's 13-F filings, there have been also hedge funds and brokerage firms as buyers, but registered investment advisors were somewhat “more cautious.”

CNBC recently polled its board of advisors on why they and their colleagues are so cautious concerning the recent products, despite it being a regulated and well-known investment product for a brand new asset class that has attracted quite a lot of interest in recent times. Responses ranged from Bitcoin's notorious price volatility to the indisputable fact that the flagship cryptocurrency is simply too young to have a major track record. Advisors also addressed regulatory compliance and the cryptocurrency's popularity for scams and scandals.

“I would describe them as cautious… that's their job,” Cohen said of the skeptical financial advisors.

“An investment advisor is a fiduciary to their clients,” she added. “This is an asset class that has historically had 90% price volatility at times, and their job is really to put together portfolios and do the risk analysis and due diligence. That's what they're doing right now.”

“This is a moment where we will present really essential data and risk evaluation. [and determining] the role that bitcoin can play in a portfolio, what form of allocation is acceptable given an investor's risk tolerance and liquidity needs,” she added. “That's the job of an advisor, so I feel this path we're on is precisely the suitable one and so they're doing their job.”

Cohen said she sees Bitcoin ETFs as a bridge between crypto and traditional finance – particularly for investors who might be interested in allocating to Bitcoin without having to manage their risk in two different ecosystems. Before ETFs, existing entry points into crypto were inadequate for some investors' desires, she said.

Alesia Haas, Coinbase's chief financial officer, said Bitcoin's adoption was “slow” – a theme repeated throughout the conference sessions.

Blue Macellari, head of digital asset strategy at T. Rowe Price, pointed to the 1% allocation that some investors consider a safe, comfortable amount. She said she views portfolio allocations to bitcoin as binary events where they should be greater than 1% or zero, but also acknowledged that caution is being taken in adopting it.

“There's a psychological component where people must test the terrain and get comfortable,” Macellari said. “It's a paradigm shift … it takes time for people to get used to it.”