Key Points
- Professional investors are increasingly considering a 3% allocation to Bitcoin, according to Bitwise CIO Matt Hougan.
- The launch of U.S. spot Bitcoin exchange-traded funds (ETFs) has been a significant factor in this shift.
Matt Hougan, Chief Investment Officer (CIO) at Bitwise, has observed a growing trend among professional investors towards a 3% allocation to Bitcoin.
Hougan has been discussing Bitcoin investment with professionals since 2018, and for the majority of that time, the focus was on a 1% allocation. However, he has noted a significant change in this mindset lately.
Spot Bitcoin ETFs Influence Investment Allocations
The CIO attributes this shift to the recent introduction of U.S. spot Bitcoin ETFs. These funds have reduced the risk of Bitcoin investments, making larger allocations more appealing.
“If ‘going to zero’ is off the table, 3% or 5% starts to make more sense,” Hougan stated. While institutional investors such as pensions and endowments may still prefer sub 1% allocations, the wealth market is increasingly looking towards a 3% allocation.
Hougan also highlighted the $11.7 billion net inflows into U.S. spot Bitcoin ETFs since their launch just over two months ago. He believes this indicates a long-term sustained demand that will persist for years.
Bitcoin ETF Adoption Varies
The pace of Bitcoin ETF adoption varies significantly, with some financial advisors already allocating 3% for all their clients, while others have not yet considered it. Hougan also pointed out that the United Kingdom lags behind the United States in investor demand for Bitcoin ETFs.
“Most professional investors still cannot buy Bitcoin ETFs. That will change through a series of 100+ individual due diligence processes over the next two years,” he said. As for the impact of Bitcoin rebalancing on the market, Hougan expects it to slightly dampen volatility.
Notably, Bitwise is among the 11 providers of spot Bitcoin ETFs in the United States. Its BITB product ranks fifth among these ETFs, with approximately $2 billion in assets under management. Furthermore, the spot Bitcoin ETFs had a particularly successful day recently, generating $418 million in net inflows.
Lastly, the trading of Tidal and Hashdex’s DEFI spot Bitcoin ETF began after the completion of its futures fund conversion.
