Wealth Market Eyes 3% Bitcoin Allocation, Says Bitwise CIO

Following discussions with professional investors about their bitcoin allocations, “3% is the new 1%,” according to Bitwise CIO Matt Hougan.

“I have been discussing bitcoin with professional investors since 2018. Over the past six years, the discussion has mainly been around a 1% allocation. That’s what most investors would think about,” Hougan said. wrote on X. “Boy, has that changed.” Almost every investor I spoke with talked about an allocation of more than 3%.

Hougan defended the new American spot Bitcoin BTC

-3.89%
Exchange-traded funds were the main reason for this change, reducing the downside risks of Bitcoin. “If zero is not an option, 3% or 5% starts to make more sense,” he said. “True institutional investors (pensions, endowments, etc.) will continue to consider allocations below 1%, but for the wealth market, 3% and above is the new thing. »

The investment chief added that net inflows into US spot Bitcoin ETFs – currently totaling around $11.7 billion just over two months since their launch – are indicative of sustained demand at long term that “will continue for years”.

Hougan suggested this was due to a “massive dispersion” in the pace of ETF adoption, with some financial advisors already allocating 3% to all their clients and others who haven’t even started to think about it.

The Bitwise CIO cited as an example investor demand in the UK lagging behind that of the US. “It’s hard to believe, but the UK looks with envy at the US’s ‘progressive’ regulatory stance,” he said.

“The truth is that most professional investors still cannot buy Bitcoin ETFs. This will change through a series of more than 100 individual due diligence processes over the next two years,” he added. “Inflows into gold ETFs have been building year after year over their first 7 years in the market. I suspect the on-ramp to Bitcoin ETFs will be shorter, but it will still take years.

Bitcoin rebalancing expected to “slightly dampen” volatility

Responding to a question about the impact of rebalancing bitcoin allocations as prices fluctuate in the market, Hougan expects there to be an impact on the market. damping effect on volatility.

“More of this generation of bitcoin buyers will rebalance than buyers in past cycles,” he said. “At the margin, this should slightly dampen the volatility of the asset (both upward and downward volatility). But it’s a prescient comment: this cycle’s new Bitcoin buyer is different from previous cycles.

Last week, Hougan said “we’re probably a few weeks away” from the first wirehouse to support spot Bitcoin ETFs. He also argued that Ethereum spot ETFs could attract more assets if launched later in May.

Bitwise Spot Bitcoin ETF

Bitwise is now one of 11 Bitcoin exchange-traded fund providers in the United States.

Its BITB product currently ranks fifth among ETFs, with approximately $2 billion in assets under management.

Yesterday, spot Bitcoin ETFs had their best day in two weeks, generating $418 million in net inflows after seeing net outflows totaling nearly $888 million last week.

Meanwhile, Tidal and Hashdex announced that trading of its spot Bitcoin ETF DEFI has finally begun after the conversion of its futures fund was completed on Tuesday.

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