Since its birth in 2009, bitcoin was intended to democratize and “futurize” finance. A case can be made that those objectives have been partially accomplished. But until recently, the audience of this digital currency’s investors has been somewhat small.
That’s expected to change with last week’s launch of 11 spot bitcoin ETFs in the U.S., a group including the WisdomTree Bitcoin Fund (BTCW). Perhaps surprisingly to some advisors and investors, New York-based WisdomTree is a seasoned veteran in the arena of cryptocurrency exchange traded products (ETPs). The firm launched its first such product more than four years ago.
Back then, bitcoin hovered around $7,700. Its all-time high is around $69,000. It was trading around $42,830 as of late January 12. That speaks to the digital currency’s well-known volatility. But price movements along those lines highlight opportunity. And that could be accretive for BTCW over time.
BTCW Credible Bitcoin Bet
As noted above, BTCW is far from alone in the new spot bitcoin field in the U.S. But it has avenues for setting itself apart from rivals. For example, the ETF’s annual fee is 0.30%, or $30 on a $10,000 investment. That’s toward the lower end of what’s found in this newly minted ETF segment. Plus, WisdomTree is waiving that fee for up to six months.
And like its peers, BTCW offers advantages relative to futures-based bitcoin ETFs. Futures-based bitcoin ETFs are still relevant for short-term traders. But spot funds such as BTCW have the potential to catch on with a broader audience of fee- and return-minded advisors and investors.
Financial Services Ripe for Disruption
“In the past, investors desiring bitcoin exposure tradeable on a platform either had to subject themselves to the possibility of widely moving discounts and premiums to net asset value OR to the changing shape—usually contango—of the bitcoin futures curve. Finally, a bitcoin ETF can provide exposure to the price of actual bitcoin,” noted WisdomTree Global Head of Research Christopher Gannatti.
Additionally, BTCW and its brethren could prove to be well-timed additions to the financial landscape. That’s because that realm is rapidly evolving. Increasingly sophisticated market participants view financial services as ripe for disruption at the hands of technology and transparency. Those are factors embraced by ETFs such as BTCW.
“We recognize that much of banking was done with paper in the past. But if you were building a system today, there might be no reason to even consider including paper,” added Gannatti. “If you are seeking to send money, there is no reason why it cannot occur nearly instantaneously, except for the fact that banks have been slow to speed up their legacy systems. Bitcoin transactions occur on a public blockchain for all to see. And the speed with which a new block can be mined is the speed with which a transaction can be finalized.”
For more news, information, and analysis, visit the Modern Alpha Channel.
