- The U.S. Securities and Exchange Commission approved the first bitcoin ETFs in January.
- Earlier this month, the 12 spot bitcoin ETFs collectively surpassed $100 billion in assets under management, marking one of the most successful ETF launches in history.
- Despite recent volatility, the price of bitcoin was still up nearly 120% year to date, as of Dec. 20, fueled in part by the pro-crypto policy proposed by President-elect Donald Trump.
- But there are strategies to consider before adding bitcoin ETFs to your portfolio.
It has been a banner year for spot bitcoin exchange-traded funds, with some of the biggest asset managers introducing ETFs that hold the flagship digital currency. But there are things to consider before adding these ETFs to your portfolio, experts say.
The U.S. Securities and Exchange Commission approved the first spot bitcoin ETFs in January. Earlier this month, the 12 spot bitcoin ETFs collectively surpassed $100 billion in assets under management, marking one of the most successful ETF launches in history.
Bitcoin ETFs give investors a “traditional way to buy an untraditional asset,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.
Despite recent volatility, the price of bitcoin was still up nearly 120% year to date, as of Dec. 20, fueled in part by the pro-crypto policy proposed by President-elect Donald Trump.
There is a lot of upside potential, said Boneparth, who is also a member of CNBC’s Financial Advisor Council. But there is typically a “tremendous amount of volatility” compared to traditional asset classes.
Advisors remain ‘cautious’ about bitcoin ETFs
“Most advisors are still relatively cautious about using these [bitcoin ETFs] with their clients,” said Amy Arnott, a portfolio strategist with Morningstar Research Services.
To that point, some 59% of financial advisors are not currently using or discussing cryptocurrency with their clients, according to a survey released in June from Cerulli Associates. The survey polled 271 advisors during the first quarter of 2024, when the price of bitcoin was lower.
Follow a ‘rebalancing policy’
If you are eager to add bitcoin ETFs to your portfolio, Arnott suggests keeping your allocation small — around 2% to 3%, maximum — and rebalancing regularly.
Your allocation should be based on your goals, risk tolerance and timeline. Without rebalancing, a ballooning bitcoin ETF position could have a “drastic impact on the overall portfolio’s risk profile,” she said.
