Bitwise CIO highlights rapid adoption of Bitcoin ETFs by advisors

Nearly $1.5 billion in advisor-driven inflows make BlackRock’s Bitcoin ETF one of the fastest-growing funds in 2024.

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Bitwise Chief Information Officer (CIO) Matt Hougan asserted that investment advisors are adopting spot Bitcoin (BTC) exchange-traded funds (ETFs) faster than any other ETF launched in recent history.

Hougan made the statement in response to a Sept. 8 social media post by researcher Jim Bianco, who claimed that less than 10% of US-traded spot Bitcoin ETFs AUM comes from investment advisors. He added that the ETFs are a “small tourist tool” instead of an adoption vehicle.

Nearly $1.5 billion from advisors

Hougan analyzed BlackRock’s iShares Bitcoin Trust (IBIT) net flows related to investment advisors, which are $1.45 billion. Compared to the total $46 billion in inflows from spot Bitcoin ETFs, Hougan agrees with Bianco that this is indeed a small amount.

However, excluding all other flows from Bitcoin ETFs and solely focusing on the $1.45 billion flow linked to investment advisors, Hougan explained that this would make IBIT the second fastest-growing ETF launched in 2024 out of over 300 funds.

He added:

“The only ETF that ‘beats’ it on assets is KLMT, an ESG ETF that was seeded by a single investor with $2 billion and trades on average ~250 shares per day, with zero investment advisor adoption.”

Hougan further highlighted that investment advisors are adopting Bitcoin ETFs faster than any other ETF in history despite the relatively lower amount invested compared to other investors.

Hougan added:

“It is just that their historic flows are overshadowed by the even-more-historic purchases of other investors.”

Bloomberg senior ETF analyst Eric Balchunas agreed with the Bitwise CIO and confirmed that the nearly $1.5 billion in advisor allocations are “more organic inflows” than any other ETF launched this year.

Not too staggering

Jim Bianco’s post on X was prompted by the major outflows from US-traded spot Bitcoin ETFs registered last week. According to Farside Investors data, the ETFs collective lost $706 million last week, with nearly $288 million in fleeing capital registered on Sept. 3.

Balchunas noted that the major outflows represent 0.5% of Bitcoin ETFs’ total AUM, which he considers is not “too staggering.” The Bloomberg analyst added:

“[People] are so warped (err spoiled) by how big the inflows are that any little outflow they freak. Princess and the Pea Syndrome).”

Additionally, Balchunas explained that the correct way to measure an ETF’s health is by tracking its flows since dollar-denominated assets under management can shrink if the asset price goes down.

He concluded by highlighting that Bitcoin ETFs have over 1,000 institutional holders after two 13F periods, which he added is “beyond unprecedented.”

Balchunas added that 20% of IBIT’s shares are held by institutions and large advisors and expects this number to reach 40% in the next 12 months.

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