Bitwise Asset Management is refusing to revise the optimistic forecast it made about the amount of funds that U.S. spot Bitcoin exchange-traded funds (ETFs) would attract this year.
Bitwise Chief Investment Officer (CIO) Matt Hougan through his latest client memo addressed concerns about ETFs’ performance year-to-date. He expressed his confidence despite inflows lagging behind his predictions of a surge in Q4 2025 that will drive total annual inflows to a new record high, exceeding that of 2024.
In the client memo, Hougan shared a few reasons why he believes “the stars are aligned for a very strong Q4 for flows.”
The first reason had to do with platform approvals. “Until very recently, the largest wealth managers in the world have been prohibited from buying bitcoin ETFs,” Hougan wrote before revealing that things are now changing.
Hougan referenced a report titled “Asset Allocation Considerations for Cryptocurrency” published by the Global Investment Committee of Morgan Stanley on October 1, which states that financial advisors and clients at the firm are now allowed to “flexibly allocate to cryptocurrency as part of their multi-asset portfolio.”
It also suggested allocations of up to 4% as appropriate for risk-tolerant investors. The move is not peculiar to Morgan Stanley. Wells Fargo also recently started allowing advisors to allocate on behalf of clients, and Hougan suspects others are not far behind.
“I don’t expect all advisors at these firms to flood into bitcoin ETFs immediately,” he wrote. “But I can tell you this from the many conversations we’ve had with advisors in recent months: There is serious pent-up demand here, and I expect meaningful flows in Q4.”
Another reason behind Hougan’s confidence is that the world is now in the grips of a debasement trade which has made BTC and gold the best performing assets of the year.
That trade is still ongoing as the dollar continues to show weakness and Hougan predicts that when “advisors sit down with their clients for their annual review,” they will urge them to buy both assets “if they want their year-end print outs to show that they hold the most successful investments.”
The last reason Hougan remains unbothered by the current deficit is that the BTC rally has shown no signs of stopping anytime soon, despite the top callers predicting that the market will soon run out of steam.
Hougan’s conviction is already being rewarded. It is only the first week of the first month in the fourth quarter, and U.S. spot Bitcoin ETFs have already experienced their second-largest daily inflows ever, totaling $1.21 billion, with BlackRock’s IBIT contributing $970 million.
BlackRock’s IBIT is now nearing $100 billion in assets under management (AUM), making it the most profitable ETF for the firm, surpassing even traditional funds like the S&P 500 ETF.
On October 6, IBIT accounted for $4.9 billion of the total $6.5 billion in trading activity, indicating heightened market interest amid rising Bitcoin prices.
U.S. Ethereum ETFs also saw significant inflows of $181.8 million, led by BlackRock’s ETHA product, which added $92.6 million, continuing a six-day positive trend.
Market observers have tagged the current Bitcoin rally as structurally sound, with reduced leverage and sustained demand. However, short-term indicators suggest a potential overextension, but that may not be enough to quell the bullish seasonal vibes linked to the fourth quarter.
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