- BlackRock expects Bitcoin and Ether to become central to model portfolios by late 2024, boosting digital currency ETF demand.
- Major wirehouses like Morgan Stanley and UBS are analyzing Bitcoin and Ether for their portfolios, highlighting growing crypto ETF interest.
- Despite recent outflows, Ethereum ETFs remain vital for access to ETH, while Bitcoin and Ether will likely dominate future investments.
The exchange-traded fund (ETF) chief investment officer at BlackRock assures that by mid-2024, as more investors start using ETFs backed by cryptocurrencies, the latter will comprise the essential components of a model portfolio. Speaking to Bloomberg recently, Samara Cohen, BlackRock’s chief investment officer for ETFs and Index Investments asked the big wirehouses, including Morgan Stanley, Wells Fargo, and UBS about their progress on the bitcoin ETF front.
Advancement of Crypto ETFs in Major Wirehouses
These wirehouses are doing thorough due diligence and risk analysis. For their portfolios, they also assess Ether (ETH) and Bitcoin (BTC). Cohen predicts that when the year comes to a finish and the new one begins, model portfolios will include these digital assets more and more. This shift will offer clearer insights into investor strategies and preferences.
Model portfolios are diversified investing strategies provided by large brokerage firms that aim to balance risk and profit. By acting as pre-made financial blueprints, these portfolios help clients make simpler investment picks. BlackRock projects a sharp increase in demand for model portfolio management over the next five years, from $4.2 trillion to $10 trillion.
This was stated by Salim Ramji, global head of iShares and index investments at BlackRock, earlier this month while stressing on the increasing relevance of model portfolios. Ramji described the trend as “massive,” reflecting how trustee advisers and asset managers increasingly align with this approach.
Future Outlook for Bitcoin, Ether, and Altcoin ETFs
Cohen highlighted the distinct roles of Bitcoin and Ether within investment portfolios. She noted that while these assets serve different purposes, they function as valuable “portfolio diversifiers.” Despite recent outflows from spot Ether ETFs, Cohen remains optimistic. She views these funds as crucial access points for investors seeking ETH exposure.
Grayscale’s Ethereum Trust (ETHE) has experienced outflows, shedding $1.7 billion since its conversion to a spot ETF. Nevertheless, a portion of these funds has been redirected into Grayscale’s zero-fee Ethereum Mini Trust (ETH). Although Ether spot ETFs have seen consecutive outflows, they remain a critical component for investor access.
Moreover, Cohen and Robert Mitchnick, BlackRock’s head of digital assets, have indicated that spot ETFs for altcoins like Solana (SOL) are unlikely in the near future. Mitchnick, speaking at the Bitcoin 2024 Conference, reiterated that Bitcoin and Ether will remain the primary focus. He projects that investors will eventually allocate around 20% of their crypto holdings to Ether, with the bulk staying in Bitcoin.
