Spot bitcoin ETFs overcame the long-standing barrier to entry into cryptocurrencies by placing bitcoin inside brokerage and advisor accounts already used for stocks and bonds. Two and a half years later, panelists at CoinDesk’s Consensus Miami conference agreed that part of it had worked. However, they said that the concentration of custody, the modest recruitment of advisors and administrative management remain unresolved.
Christopher Russell, head of analysis and strategic planning at Calamos Investments, expressed the access gain in numbers. “The ETF solved a big problem: access,” he said. The dozen or so U.S. spot bitcoin ETFs now hold about $107 billion in combined assets, with about $20 billion in institutional hedge funds, $12.5 billion allocated by registered investment advisors, and 60% in direct retail accounts.
Of the $146 trillion in assets managed by advisors, that $12.5 billion allocation “seems like a big number, but it’s a really small number,” Russell said. He pointed out what he called the 1% problem: “They can take a 1% position in a 50-60 vol asset, but they don’t want to spend 50% of their client meetings explaining why a 1% position is down 50%.”
Jean-Marie Mognetti, CEO and co-founder of CoinShares, pressed on the structural aspect. “Right now everyone is using one custodian, which is Coinbase, which creates massive concentration risk in the market,” he said. “From a protection and diversification standpoint, it’s a zero. If you were in any hedge fund, you’d want to get multiple prime brokers to diversify your risk.”
Mognetti’s warning lands in a market that no longer has a single uniform custodian, but where Coinbase remains a centerpiece of the ETF infrastructure. Fidelity’s FBTC uses Fidelity Digital Assets, VanEck’s HODL launched with Gemini and later added Coinbase, BlackRock’s IBIT added Anchorage Digital Bank alongside Coinbase, and Morgan Stanley’s proposed bitcoin ETF names Coinbase Custody and BNY as bitcoin custodians.
Aaron Dimitri, general digital asset advisor at Flow Traders, said ETFs have moved Bitcoin from pure buy-and-hold exposure to broader portfolio construction. “It’s not just about buying and holding an asset in the hope that it will appreciate over time,” he said. “You can incorporate performance products, different structured vehicles.” For institutions, Dimitri said, ETFs don’t eliminate bitcoin’s volatility, but they make exposure easier to package and manage. “If you’re going on a roller coaster, you might as well make sure the seat belt locks before the ride begins,” he said.
Simeon Hyman, global investment strategist at ProShares, rejected treating volatility as a problem that needs to be solved. “Volatility is a feature, not a bug,” he said, citing that bitcoin and ether are up 20% since the start of the war in Iran. If an asset is volatile but not closely correlated with stocks and bonds, “adding a little bit to that will improve the efficiency of the Sharpe ratio,” Hyman said. “But you have to be prepared to tell the story.” He also argued that futures-based products still matter: ProShares’ BITO, launched in October 2021, has around $2 billion in assets but still trades at 35% of the daily volume of BlackRock’s IBIT, the dominant spot product.
The discussion lands in a context of unstable demand. Strategy, the largest corporate holder of Bitcoin with 818,334 BTC, this week reported a net loss of approximately $12.5 billion in the first quarter. CoinDesk reported that the company signaled that it might sell some bitcoins to help meet its dividend obligations. Strategy accumulation has been widely seen as one of the structural pillars of demand in the post-ETF era.
When asked for a five-year price target, Russell predicted that Bitcoin will reach $1 million within five years, “but it won’t be a straight line.”
