The Wall Street machine needs to be fed, and pushing more crypto ETFs is an obvious choice, especially given the focus on Bitcoin. (Bitcoin) The products have been collected. This essentially means thousands of salespeople meet to showcase a new product, explain its features, and see if people want to buy it.
But sell the ether (Ethereum) ETFs can pose interesting challenges for issuers. Investors may have just purchased a Bitcoin ETF, so their practical need to spice up their portfolio has already been met. Why do you need another crypto diversification tool?
This is something Sui Chung, CEO of CF Benchmarks, a digital asset index provider and partner of the BlackRock iShares Bitcoin ETF (IBIT), has been thinking about, especially We recently published a cheat sheet Explaining to investors the benefits of Bitcoin-backed securities.
While defining Bitcoin technology and its potential financial applications is part of the explanation, Chun believes it is secondary to the Bitcoin ETF's investment role. Boost overall risk-adjusted returns.
“What matters is how Bitcoin behaves and its price history,” Chong said in an interview. “When you incorporate Bitcoin into a portfolio of stocks, bonds, and cash, it becomes truly the most powerful diversifier in investment history. Just a little bit can double your Sharpe ratio.”
Chung said it will be very interesting to see how mainstream financial institutions such as BlackRock, Franklin Templeton and Fidelity market ETH ETFs to typical TradFi investors. “Because you're already going down the diversification route and selling Bitcoin. Someone already has 1.5% or 2% of Bitcoin in their portfolio.”
In a way, BlackRock CEO Fink has already begun to dive into the complex world of Ethereum by mentioning tokenization. Tokenization is a much-vaunted concept among TradFi companies these days, and one that most ETF issuers would believe in wholeheartedly. But such educational efforts also need to explain smart contracts and decentralized finance (DeFi), not to mention blockchain staking and the can of worms that is blockchain, Chong said. SEC's opinion on it.
Of course, the key difference between Bitcoin and Ethereum is how the latter has moved away from being an energy hog. proof of work Migrate your security system to a greener validator model.
“I don't think ESG environmental, social and governance is going to be marketed. Do we really want to go there when there's already so much discussion around ESG investing today? Probably not,” Chong said. Told.
BlackRock declined to comment.
