The four largest wirehouses in the U.S. are moving closer to embracing spot Bitcoin exchange-traded funds. Merrill Lynch, Morgan Stanley, Wells Fargo, UBS, and Bitwise are expected to fully open access to these ETFs by the end of 2025.
Bitwise’s Chief Investment Officer, Matt Hougan, opines that the transition may result in record-breaking bitcoin ETF net inflows during the current year. Together, wirehouses manage more than $10 trillion in client assets.
Their support can be a major game changer in the use of Bitcoin in mainstream finance. In the opinion of Hougan, enabling the free recommendation of Bitcoin ETFs will enhance exposure and accessibility to a broad group of investors.
Bitwise eyes unlocking institutional demand
Following the launch of spot Bitcoin ETFs in January 2024, major brokerage platforms’ adoption has been slower than anticipated. Only a limited number of firms, Morgan Stanley being among them, opened access up partially and only to high-net-worth investors. But the latest indications point towards full access being imminent.
By the close of last April, spot Bitcoin ETFs had garnered $11.8 billion in year-to-date net inflows. By year’s end, that had climbed to $35.4 billion. So far this year, the inflows come in barely above $4 billion, owing largely to weakness in the market. But Hougan is optimistic that wirehouse access will shift the tempo.
At a recent industry conference, Hougan noted that there is doubt that remains. Investors doubt the long-term value of Bitcoin. They fear that it will crash if faith erodes. Hougan agreed that that is the case but noted that belief also drives the value of gold and other assets to some extent.
Bitcoin breaks into the mainstream
Even with doubts surrounding it, institutional investment in Bitcoin is increasing. Large financial institutions now trade and store Bitcoin. Large hedge funds and publicly traded companies own Bitcoin. Even traditional funds and retirement funds are getting in on the action.
Regulatory clarity is increasing. Congress is in the process of creating new rules. ETF products now give broad access to Bitcoin to retail and institutional investors. Giants such as BlackRock and Invesco are spearheading the momentum.
Hougan thinks that most of the previous hurdles have disappeared. Warehouses will soon open their platforms and more investors can take the next step. Increasing availability and visibility should be met with increased influxes soon. For the time being, the Bitcoin ETF market is waiting and ready for what may be a breakout year.
