By Mark DeCambre
Happy Sunday! Welcome to the penultimate installment of Need to Know Crypto Edition, ahead of the launch of a new weekly crypto newsletter “Distributed Ledger,” which will kick off next month.
I’m Mark DeCambre, managing editor of markets and I’ll walk you through the latest and greatest in digital assets this week so far. There is a lot of ground to cover, especially as ProShares bitcoin futures exchange-traded fund could debut as early as next week , marking a milestone in digital assets.
Crypto in a snap
It has been nearly eight years in the making and scores of applications have been rebuffed along the way, but there is finally going to be an ETF loosely pegged to bitcoin that offers average investors access without having to worry about custody of digital assets.
ProShares submitted an amended filing with the Securities and Exchange Commission on Friday for a bitcoin futures ETF, which carried all the hallmarks of a regulatory filing that might lead to a launch soon, said Todd Rosenbluth, head of ETF and mutual fund research at CFRA, in a phone interview.
The ETF isn’t the hoped-for U.S. fund that is directly backed by bitcoin such as those from our neighbors to the north but it is something that crypto bulls can hang their hats on, with many taking it as a watershed moment for an asset that didn’t exist until 2009.
In any case, the fervor around the ETF helped jolt bitcoins’s price /zigman2/quotes/31322028/realtime BTCUSD -1.38% , and that of the broader complex, sharply higher, with the world’s No. 1 digital asset by market value changing hands at $61,749, up 8.2%, as of Friday afternoon. That is close to a record at $64,888.99, according to CoinDesk. (Our colleagues at Dow Jones Market Data have that record at $63, 381.20, put in on April 15, based on values at 5 p.m. ET)
Ether /zigman2/quotes/108573964/realtime ETHUSD -2.31% on the Ethereum blockchain was up 2.6% at $3,876.92, with a record at $4,379.11, according to CoinDesk, and meme asset dogecoin /zigman2/quotes/226077044/realtime DOGEUSD -3.66% was down 0.1% at 23.4 cents, well off its record high at 74 cents.
Will they come?
In the wake of the news on the ProShares futures ETF, and what is likely to be a steady flow of similar fund products, we talked to Ben Cruikshank, head of Flourish, an investing platform, owned by insurance giant MassMutual, that works with hundreds of registered investment advisers, or RIAs, that oversee $1 trillion in assets.
Flourish said that there is white-hot interest in crypto but advisers are reluctant from a fiduciary perspective to recommend a bitcoin futures product for clients when there are better options to owning crypto such as Coinbase Global or other digital-asset exchanges.
“The feedback that I’m getting is a derivative is a less efficient form of ownership,” Cruikshank told MarketWatch in a phone interview.
RIAs are asking as “a fiduciary are we going to recommend a complicated futures product that is a more complicated than…opening a Coinbase account in 5 minutes?”
“It’s a hard thing to justify an inferior futures product,” he said. “That is less my feedback and more what firms are telling me.”
Cruikshank estimated that some 50 million Americans already have invested in crypto and said that the sense among RIAs is that “investors always prefer direct access if it is available.”
“People value convenience and I’m not saying that there won’t be some adoption…but the firms we are speaking to are extremely skeptical” of a futures ETF, Cruikshank said.
|Biggest gainers||Price||%Weekly return|
|Source: CoinMarketCap.com. Biggest gainers within the top 100 by market value|
|Biggest losers||Price||%Weekly Return|
|Source: CoinMarketCap.com. Biggest losers within the top 100 by market value|
Bitcoin $100,000 in 2023?
We chatted briefly with Jurrien Timmer, director of global macro at Fidelity Investments in Boston, about the outlook for bitcoin and his recent tweets suggesting that, based on his fundamental analysis, bitcoin was heading for $100,000 by 2023.
Timmer said a combination of network effects, the theory that value is based on the increased usage of a good or service, and stock-to-flow models, which represent a way to value an asset based on supply/demand metrics, are converging in the next two years or so.
“You get a lot of hyperbolic price targets…which aren’t price targets,” Timmer said. “The only number that I am comfortable with has some basis in research,” he told MarketWatch.
He said that bitcoin offers a unique value proposition and that some investors viewed it as digital gold. In fact, Timmer said that bitcoin may be taking some market share from gold and that allocations to bitcoin are likely some fraction of what is allocated to the precious metal.
Timmer says that bitcoin might fit on the 40% side of the traditional 60:40 “ model ” portfolios, with 60% representing an allocation to equities and 40%, representing your typical allocation to bonds.
Morgan Stanley analyst, led by Ken Zerbe, published a list of what it described as “crypto banks,” otherwise traditional bricks-and-mortar institutions that “offer crypto-related products or services.