Investment advisor Brett Sifling from Gerber Kawasaki has observed significant interest among the firm’s clients in the newly introduced spot bitcoin ETFs, considering them as another tool for portfolio management.
Since their debut last month, spot bitcoin ETFs have garnered approximately $40 billion in cumulative trading volume, with BlackRock and Fidelity leading in capital inflows. Gerber Kawasaki, managing over $2.3 billion in assets, recently made a modest investment in BlackRock’s IBIT spot bitcoin ETF through its AdvisorShares ETF, purchasing 1,000 shares valued at around $28,000.
The decision to invest in BlackRock’s spot bitcoin ETF was influenced by factors such as liquidity and expense ratio. Ross Gerber, the firm’s co-founder, highlighted BlackRock’s ETF as having “more liquidity” and charging a competitive expense ratio of 0.25%.
However, investing larger sums into these ETFs is subject to approval processes with custodians like LPL Financial and Charles Schwab. The due diligence includes considerations of brand new products and ensuring fiduciary responsibilities are met.
Sifling emphasized the importance of security when selecting a spot bitcoin ETF, highlighting the need to understand how securely issuers hold the underlying bitcoin. He expressed interest in learning more about the security measures implemented by ETF companies.
Despite the growing interest in spot bitcoin ETFs, complexities in the settlement process post-capital inflows into the ETFs, and subsequent bitcoin purchases pose challenges. Sifling mentioned challenges in obtaining detailed information on security processes due to potential vulnerabilities associated with public disclosure.
Overall, Gerber Kawasaki’s foray into spot bitcoin ETFs underscores the increasing demand for diversified investment options in the cryptocurrency space among institutional investors and wealth management firms alike.