Spot bitcoin ETFs cleared crypto’s longstanding barrier to entry by placing bitcoin in brokerage and advisor accounts already devoted to stocks and bonds. After two and a half years, panelists at CoinDesk’s Consensus Miami conference agreed that some had worked. But they said custodial concentration, modest enrollment of counselors and plumbing work remain unresolved.
Christopher Russell, head of strategic planning and analysis at Calamos Investments, framed the access gain in numbers. “The ETF solved a big problem, which was access,” he said. The 10 or so US spot bitcoin ETFs now have about $107 billion in combined assets, with about $20 billion in institutional hedge funds, $12.5 billion allocated by registered investment advisers and 60% sitting in direct retail accounts.
Out of $146 trillion in advisor-managed AUM, that $12.5 billion advisor allocation “seems like a big number, but it’s a really small number,” Russell said. He pointed to 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 dropped 50%.”
Jean-Marie Mognetti, CEO and co-founder of CoinShares, pressed on the structural side. “Right now they all use one custodian, which is Coinbase, which creates a massive concentration risk in the market,” he said. “From a protection and diversification standpoint, it’s a zero. If you were in a hedge fund, you’d want a number of prime brokers to diversify your risk.”
Mognetti’s warning lands in a market that is no longer uniformly single-custodian, but where Coinbase remains a central part 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 along with Coinbase, and Morgan Stanley’s proposed bitcoin ETF names Coinbase Custody and BNY as bitcoin custodians.
Aaron Dimitri, general counsel for digital assets at Flow Traders, said ETFs have shifted bitcoin from pure buy-and-hold exposure to a broader portfolio construct. “You don’t just buy and hold an asset, you hope it appreciates over time,” he said. “You’re able to build in dividend products, different structured vehicles.” For institutions, Dimitri said, ETFs don’t remove bitcoin’s volatility, but they make the exposure easier to package and manage. “If you’re going on a roller coaster, you might as well make sure the lap belt is locked before the ride starts,” he said.
Simeon Hyman, global investment strategist at ProShares, pushed back against treating volatility as a problem to be manipulated away. “Volatility is a feature, not a bug,” he said, citing both bitcoin and ether, which have risen by 20% since the start of the war in Iran. If an asset is volatile but not highly correlated with stocks and bonds, “you sprinkle a little bit in and you’re going to improve the efficiency of the Sharpe ratio,” Hyman said. “But you have to be ready to tell the story.” He also argued that futures-based products retain a role: ProShares’ BITO, which launched in October 2021, holds about $2 billion in assets but still trades at 35% of the daily volume of BlackRock’s IBIT, the dominant spot product.
The discussion lands on an unsettled backdrop of demand. Strategy, the largest corporate Bitcoin holder with 818,334 BTC, reported a net loss of around $12.5 billion in the first quarter this week. CoinDesk reported that the company signaled it might sell some bitcoin to help meet dividend obligations. The strategy’s accumulation has been considered one of the structural demand pillars of the post-ETF era.
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.”
