New Bitcoin ETFs Are Raking In Cash but Not From Financial Advisors. Here’s Why. (2024)

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New Bitcoin ETFs Are Raking In Cash but Not From Financial Advisors. Here’s Why.? ›

That's because many—perhaps most—large wealth management firms have policies in place barring advisors from making unsolicited recommendations of investments in digital currencies.

13.7% of financial advisors are using or discussing cryptocurrency with their clients, including only 2.6% making recommendations themselves, while another 26.4% expect to be able to discuss or use cryptocurrency investments with their clients in the future, still leaving more than half who never expect to do so.

In the six months that ended July 31, the median return for the first 10 funds that invest directly in bitcoin was 53.5%. Nine of the 10 have nearly identical returns, ranging from 53.7% by Franklin Bitcoin (symbol EZBC) to 53.3% for Fidelity Wise Origin Bitcoin ETF (FBTC).

Bitcoin ETFs: The Most Successful ETF Launch in History

Within a single day of being listed, the Bitcoin ETFs saw over $4 billion in inflows, shattering records held by any ETFs that debuted prior. As the weeks and months went on, many of the individual funds continued to break records.

Disadvantages of Crypto ETFs

1 When buying shares of an ETF, you pay your brokerage's trade fees and the fund's expense ratio. Crypto ETFs have expense ratios from 0.39% to 1.5%, much higher than the transaction fees charged by crypto exchanges. 9.

Ramsey is clear about avoiding crypto and not getting tempted by the buzz. “Crypto is not a safe investment. You could lose your shirt (and pants) messing around with crypto. Steer clear …

Bitcoin's dizzying price movements make it a risky investment, say investing experts: 'It's pure, unadulterated speculation'

There are several benefits to owning the actual Bitcoin by purchasing through a cryptocurrency exchange. In some situations, the ETFs offer investors all they need. The decision between the two will come down to personal preference and technological savvy.

Another form of diversification is investing in assets with low correlation. Assets with low correlation tend to move in different directions, so for instance when stocks are up, Bitcoin or a Bitcoin-linked ETF tend to be down. This further diversifies your portfolio, and can help you weather market bumps over time.

Who owns the most Bitcoin ETFs? ›

Blackrock's IBIT Is Now the Largest Bitcoin ETF.

The futures-based Bitcoin E.T.F.s can end up being more expensive because the contracts expire and must be sold and repurchased, or “rolled,” each month. Those costs can be potentially significant, particularly when the new contracts cost more than the previous month's, causing managers to buy high and sell low.

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.

However, Vanguard does not have plans to create a Vanguard bitcoin ETF or other crypto-related products. Additionally, such products from other issuers will not be offered on our brokerage platform.

The most important thing to remember about Bitcoin is that it is a high-risk asset. Never invest money that you aren't willing to lose. Treat Bitcoin as a means of slowly growing your existing wealth rather than an all-or-nothing gamble. As with other investments, it's important to hedge your portfolio.

With such growth, many large institutions are attracted to buy Bitcoin. These investors are those with large capital, such as money managers, hedge funds, and institutions.

Sarathy concurs that there are risks involved with investing in these cryptocurrencies, including price volatility, cybersecurity concerns and a lack of regulations compared to traditional currency. Ultimately, it's up to each individual user how much risk they want to take.

Never invest all your savings in crypto currencies, it's a volatile industry, and when you do decide on what percentage to invest based on your risk tolerance level, do not invest all in Bitcoin, diversifying your portfolio is the best thing you can do.