Late last week, the Securities and Exchange Commission reluctantly approved a spot Bitcoin ETF. If you're not familiar with financial acronyms, this stands for Exchange Traded Fund. It can be considered a very easy way to invest in Bitcoin from your brokerage account, without requiring blockchain. “Spot” funds invest directly in assets rather than betting on futures contracts.
Every time I write about Bitcoin, I mention its price, which is currently about $42,000 per coin, and right after that I say something like, “Talk to your financial advisor.”
So, in light of the news of this new route to Bitcoin investing, I consulted some financial advisors about what they're telling their clients.
We asked certified financial planner Paul Brahim how often his clients ask him about Bitcoin.
“Well, if you have a client who hasn't asked you a question about Bitcoin yet, it's easy to ask, right?” he said. “The dialogue has been going on since Bitcoin came out. How many years ago?”
Brahim is Managing Director of Wealth Enhancement Group. Before spot ETFs, Brahim could have ignored Bitcoin. He told his clients that it was dangerous and unregulated, and that if they lost their crypto wallet keys, they would simply lose all their money.
Now he would tell his clients something like, “If you want Bitcoin in your portfolio, that's fine. Make sure the amount is more suitable for roulette than retirement savings.''
“Let's put this in the category of casino capital rather than core,” he said.
Matt Hogan of Bitwise Asset Management said he has been receiving a lot of calls from financial advisors about the Spot Bitcoin ETF his company launched last week. But he doesn't expect to win over crypto skeptics overnight.
“They'll study it for months and months and then tiptoe into the ocean,” he said.
Hogan said he expects advisor attitudes toward Bitcoin to follow a similar trajectory to when gold first acquired ETFs in 2003.
“We used to call people who invested in gold 'gold bugs.' We talked about aluminum foil hats. “They gathered in a dusty convention hall off the Las Vegas Strip to discuss this barbaric relic,” he said. “But ETFs have changed that mainstream.”
Hogan said Bitcoin ETFs are not for everyone. That is likely to include many of his ESG investors, people who want to put their money to work with environmental, social and governance goals in mind.
“We're in the Boulder, Colorado area, so naturally almost everyone is interested in ESG investing,” said Dan Yarger, president of MY Wealth Planners. “That's actually a big obstacle.”
As of 2022, more than 50% of Bitcoin mining was powered by coal and gas.
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