The next innovation in cryptocurrencies won't come from the launch of the Solana ETF. Asset managers say they are more focused on other ways for investors to diversify their portfolios through cryptocurrencies.
The highly anticipated launch Bitcoin January's ETF success was a success, but many are wondering what's next for the industry. Some crypto enthusiasts are speculating on the next coin to be put into ETF wrappers (with many speculating it could be Solana), but asset managers at the Wyoming Blockchain Symposium in Jackson Hole said the search The purpose doesn't end there.
“When we think about how we educate investors about this broader ecosystem, it’s not token after token, but…how we think about portfolio construction and how we create representation of different industries in this evolving ecosystem. risk exposure,” he said. Cynthia Lo Bessette, Head of Digital Asset Management, Fidelity Investments. “We have an opportunity to be able to add value beyond just individual access to some of the largest crypto tokens.”
Actively managed products
Steve Kurz, global head of Galaxy Asset Management, noted that the firm recently partnered with custody giant State Street to develop active trading products.
“It’s not about the next coin, it’s about the 75 securities that are related to cryptocurrencies right now — in fact, there are futures, options, crypto ETFs, and various exchange-traded instruments around the world,” he said. “Accordion has grown so much in just one year that you can start developing aggressive strategies.”
He added: “While I don’t think this is a path that the average crypto asset manager would call, it is a path that brings crypto awareness and crypto education through a different set of tools.”
For example, outside the United States, investors can purchase the CoinShares physically collateralized Solana ETP. ETFs tracking the spot price of Bitcoin were launched in Canada as early as 2021, long before they were approved in the United States
Portfolio Diversification
For some asset managers, diversifying their cryptocurrency investments may be key, in addition to focusing on a single generation coin offering. There are currently 11 Bitcoin ETFs in the United States, and aside from the fee structure, they will look more or less the same to most investors.
“If you look at the profitability of the asset management business in a platform sense, over the next three or four years you're going to be moving to (alternative) products,” Kurtz said. “Hedge funds, liquid token funds, venture capital funds – These are the models that are being tested.
Investors and money managers who are comfortable with Bitcoin often recommend small allocations (between 1% and 5%) to increase the risk of the portfolio without exposing it to the cryptocurrency's notorious volatility. .
However, the entry of different cryptocurrency-related securities into the market may give asset managers an opportunity to change this standard and raise client expectations.
“Active management becomes part of the conversation, and your differentiation is not about fees or total cost of ownership, but what strategy you’re developing, what alpha you’re creating — that’s when we know we’ve actually accomplished something with that. as an asset class,” Kurtz said.
He added: “There really is no real asset management industry in the cryptocurrency space, it has been a cottage industry until Bitcoin ETFs came along.”