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There Remain Many Critics of Bitcoin in Finance, Despite New Love from BlackRock
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Many mid-sized asset managers in the traditional financial sector remain skeptical of bitcoin, even after some of the industry’s biggest names began endorsing the cryptocurrency.
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Some call Bitcoin a “bubble,” while others don’t see customer demand and therefore have no reason to participate in the alternative asset class.
Back when it was celebrating its 15th anniversary and after years of mockery from others on Wall Street, Bitcoin was accepted in 2023 by one of the most powerful investors in the world, BlackRock. While other traditional financial firms had approved the original cryptocurrency, BlackRock’s blessing – in the form of a deposit to create a Bitcoin Spot ETF And vocal praise by CEO Larry Fink – was widely considered a surprising and significant turn of events.
The tone around bitcoin {{BTC}} seemed to change among financial professionals – at least some of them – subsequently, with more and more players expressing support.
And yet, earlier this month, at an event in Miami for investment professionals, it was clear that a significant portion of the industry continues to have serious doubts about bitcoin.
“Bitcoin is just an extractive bubble,” said Mike Green, portfolio manager at Simplify Asset Management, during the recent Miami Investment Masters Symposium. “It’s actually a mechanism for transferring wealth from one group of people to another.”
However, this skepticism does not translate into Simplify completely ignoring Bitcoin. It offers clients two funds with exposure to BTC: the Simplify Bitcoin Strategy PLUS Income ETF and the Simplify US Equity PLUS GBTC ETF, which invests 10% of its assets in the Grayscale Bitcoin Trust (GBTC).
There is a demand for bitcoin, so Simplify fulfills that desire, Green said. But that doesn’t change his overall view that Bitcoin is just a wealth transfer mechanism. “No value was created and nothing was done on its own.”
Skepticism about Bitcoin remains common
There are signs of greater reluctance. For spot Bitcoin ETFs, although they have seen unprecedented demand for a newly launched product, they are not offered to clients of some wealth management firms, including Avant-garde and State Street. Only half a dozen top firms have revealed that they let their clients invest in the funds and experts estimate that most of the volume in Bitcoin ETFs comes from individual investors.
Banking giant Goldman Sachs, despite playing a key role for BlackRock’s iShares Bitcoin Trust (IBIT) as a so-called authorized participant, reiterated earlier this month that he does not believe that bitcoin has any place in investment portfolios and that its customers are not interested in cryptocurrency.
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Stone held by central banks to support global trade and finance. – “in his lifetime”. One of the main reasons why the largest conventional currencies are the cornerstone of finance is this reserve currency status.
Gold fan and economist Peter Schiff called Bitcoin gambling money that has no use in the present or the future. “This whole thing is one big bubble,” he said at the event, as bitcoin traded around a new record high above $73,000. “It’s going to collapse.”
While some asset managers have chosen sides and remain firm on their views, others are simply not at the point yet where they are forced to view the asset class as an investment – despite the creation recent release in the United States of 11 Bitcoin ETFs from BlackRock. , Fidelity, Grayscale and others designed to make it easier for investors to buy Bitcoin.
Green said his company isn’t seeing much interest in bitcoin from its customers – although he admits that could be partly the company’s fault because it doesn’t actively market the cryptocurrency and does not advise clients to invest in it.
Another asset manager, who asked to remain anonymous, said the company was making so much money from its clients that it simply had no need for Bitcoin, especially because the crypto asset requires a forecast level than all other transactions the company makes. don’t do it. “Business is booming because of the attention we are giving,” the manager said.
According to Green, many of his peers are unwilling to put in the work to truly understand the technologies behind bitcoin and other crypto assets, especially when there is no pressure from customers to do so and because speaking negatively about cryptocurrency or expressing skepticism or speculation in the space does not appear to have a negative impact, he said.
As a result, a huge amount of misinformation is circulating in the industry.
“There’s a lack of interest in really understanding it, because it’s really difficult to pursue something like Bitcoin as a whole,” he said.