To buy, or not to buy? That's the Shakespearean dilemma facing advisors now that the market has gone from a bitcoin bonanza back to business as usual.
The VanEck Bitcoin Trust ETF (HODL) was one of 11 spot bitcoin ETFs that started trading last Thursday. After years of planning, anticipation and regulatory filings, HODL finished its first day on the public markets at a price of $52.92 on volume of 482,500 shares.
In the week since its debut, the shares have fallen 8% to $48.46, while daily volume has steadily dropped to about a quarter of the exchange-traded fund's opening day action.
So after all that effort to get HODL (short for “hold on for dear life” among crypto cognoscenti) and other bitcoin ETFs up and running, what should advisors be thinking about when considering the crypto space for clients?
Matthew Sigel, head of digital assets research at VanEck, said advisors should use this time to leg into the world's best-performing asset over the past one, three and five years, and do it in an extremely cost-effective manner. Sigel estimates these ETFs will provide more than a 50% cost savings to the end investor compared with doing a retail transaction on a site like Coinbase.
“We're very encouraged with how these products are trading in the market,” he said. “The bid-ask spreads have come down a lot. They're trading at very minimal discounts or premiums to NAV, and there's plenty of volume for advisors to get access.”
As to where spot bitcoin ETFs like HODL fit in a client's portfolio, Sigel said that right now the buyers are mostly speculators. Nevertheless, as the investing public grows more comfortable with crypto as an asset class, and an uncorrelated one at that, he expects advisors to find more deliberate places for it in client portfolios.
“We expect that over the course of this year, brokerages and banks will increasingly come out with asset allocation models that incorporate bitcoin, perhaps taking 1 to 3 percentage points out of the fixed-income bucket into this store of value with a fixed supply, not subject to the money printing of the Federal Reserve,” he said.
And as to what makes HODL better or worse than other spot bitcoin ETFs on the market, Sigel believes the VanEck offering promotes true long-term investing and belief in the future of crypto.
“HODL is really a term that means buy and hold, so we think that's something that can resonate with investors,” he said. “We've put a lot of effort into education and table-setting in this space. We've made the largest seed investment off of our own balance sheet of any sponsor to date. We're donating 5% of the profits back to the open-source bitcoin developer community and we see a lot of opportunity to educate on this product for the institutional customer base as well.”
Finally, Sigel said the success of HODL and other spot bitcoin ETFs opens the door for the next generation of crypto ETFs. VanEck's spot Ethereum ETF is first in line on the SEC's waiting list.
“Hopefully there will be other spot crypto ETF products on the market later this year,” he said.
Perhaps by that time a new crypto ETF will be no big deal for issuers, advisors and investors – or at least not as big as the spot bitcoin ETF was last week, before it became just another buy or sell.
The Nashville-based RIA platform unveils a branded digital workflow solution designed to fix the onboarding gap that frustrates financial advisors.
Despite relying heavily on Social Security for retirement income, many older Americans doubt the program will deliver full benefits in the future.
BlackRock data shows workers without a financial cushion are far more likely to raid their 401(k) — and less likely to ever start contributing.
With just a small fraction of eligible kids enrolled ahead of the July 4 launch, experts warn lower-income families could be falling behind.
When even perfect portfolios come under pressure from fear or greed, a disciplined and balanced framework can make for better investing decisions.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
