• Despite endorsements from prominent figures in the industry, many mid-sized asset managers in traditional finance remain hesitant about bitcoin.
• Some view bitcoin as a speculative “bubble” and cite a lack of client demand as a reason for their reluctance to engage with this alternative asset class.

Bitcoin’s recent rally, marked by significant withdrawals totaling $1 billion, indicates a prevailing bullish sentiment in the market. Technical analysis also suggests a positive outlook for bitcoin, with its triangular consolidation pattern pointing towards potential growth. The month of October, dubbed ‘Uptober’ for bitcoin, witnessed a notable 28% price surge as the cryptocurrency market experienced a broad rally.

In a notable shift of sentiment, BlackRock, a major player in the investment world, embraced bitcoin in 2023 by filing to establish a spot bitcoin ETF and receiving public acclaim from CEO Larry Fink. While other traditional finance entities had previously supported bitcoin, BlackRock’s endorsement was seen as a pivotal moment.

Despite this, skepticism towards bitcoin persists within the financial industry. At a recent investment event in Miami, Mike Green of Simplify Asset Management criticized bitcoin as a mechanism for wealth transfer, labeling it as an “extractive bubble.” Despite his reservations, Simplify offers investment options tied to bitcoin to meet existing demand.

The hesitance towards bitcoin is widespread, with some wealth management firms like Vanguard and State Street refraining from offering spot bitcoin ETFs to their clients. Even Goldman Sachs, a key player in the financial sector, reiterated its stance against bitcoin’s inclusion in investment portfolios due to a lack of client interest.

Experts like Stone X Group’s chief strategist Kathryn Vera and economist Peter Schiff continue to express doubts about bitcoin’s long-term viability, dismissing it as speculative or lacking practical utility.

While some asset managers have embraced bitcoin, others remain unconvinced, attributing their success to traditional investments and a lack of client pressure to explore cryptocurrencies. The complexity of understanding blockchain technologies and the absence of client demand further contribute to the industry’s overall skepticism towards bitcoin.

In conclusion, despite increasing acceptance and adoption of bitcoin in certain circles, a significant portion of asset managers in traditional finance continue to harbor doubts and reservations about the cryptocurrency, reflecting a broader sentiment of caution and skepticism within the industry.