Cryptocurrency analyst and advocate Scott Melker recently made bold projections regarding a massive inflow into Bitcoin following the approval of a BTC Spot Exchange-Traded Fund (ETF). However, several crypto analysts have voiced their disagreement and criticized Melker’s inflated projections.
Melker suggested that $570 billion could potentially be invested in a Bitcoin ETF, which would represent a mere 0.5% of the overall assets managed by Registered Investment Advisors (RIAs). He highlighted that RIAs currently manage assets valued at $114 trillion, while the total market capitalization of Bitcoin stands at $860 billion.
One of the analysts who challenged Melker’s projection is Eric Balchunas, a top Bloomberg Intelligence analyst. Balchunas expressed skepticism towards the high valuation of the RIAs assets, stating that it appears “really high.” He cited data from market tracker Cerulli, which suggests that the total advisor assets are worth around $30 trillion, significantly lower than Melker’s estimation.
Rick Ferri, an investment advisor with 35 years of experience, also criticized Melker’s prediction, calling it overblown. Ferri emphasized that Melker’s expectation of a massive inflow seemed unfounded, particularly considering that advisors who wished to own BTC would have already done so through products like Grayscale Bitcoin (BTC).
Melker’s response to Bruce Fenton’s post on the potential impact of a Bitcoin Spot ETF prompted his inflow projection. Fenton argued that the ETF could be a game-changer for the cryptocurrency market, as many brokers, financial advisors, and RIAs still lack knowledge about BTC. He emphasized the importance of advisors keeping up with public trends and highlighted Bitcoin’s strong performance and correlation over the past decade.
Fenton further predicted that large investment firms would invest billions in promoting Bitcoin-based investments to their clients, leading to widespread public awareness and the creation of enticing advertisements. He believed that financial advisors, driven by economic motivations, would be motivated to learn more about Bitcoin.
While Scott Melker’s inflow projection may have grabbed attention, it is essential to critically examine the flaws in his estimation.
Firstly, the valuation of assets managed by RIAs at $114 trillion seems inflated and out of line with other data sources. Eric Balchunas rightly pointed out that the total advisor assets are more reasonably estimated at around $30 trillion, significantly lower than Melker’s numbers.
Secondly, Rick Ferri’s critique is valid in suggesting that any advisors interested in Bitcoin would likely have already invested through existing products like Grayscale Bitcoin (BTC). Thus, Melker’s assumption of a significant inflow through a Bitcoin ETF may be unrealistic.
Scott Melker’s projections of a massive inflow into Bitcoin through a BTC Spot ETF have generated criticism from crypto analysts. The estimated $570 billion inflow projection seems overinflated, and the valuation of RIAs assets at $114 trillion appears to be an exaggeration. While the potential impact of a Bitcoin ETF is a topic of interest and discussion, it is crucial to approach projections with caution and consider dissenting opinions. As the cryptocurrency market continues to evolve, thorough research and analysis are necessary for making informed investment decisions.