The long-awaited decision from the US Securities and Exchange Commission (SEC) to allow Bitcoin to be offered as an Exchange Traded Fund (ETF) was announced a couple of weeks ago. The market had long been expecting this move, so the price reaction was muted. Bitcoin outperformed almost all other recognised asset classes last year, with a stellar return of over 100%.
Source: Yahoo Finance
ETFs allow investors to invest in assets which are typically difficult to access and exit, providing liquidity at a low cost.
When gold ETFs were launched, they had a positive impact on the gold price, so this is good news for the crypto industry (although the ruling only applies to Bitcoin at the moment, not other crypto assets).
Major asset classes in 2023 achieved as follows:
We do not participate in cryptocurrencies such as Bitcoin, seeing it as pure speculation. Nothing wrong with that – people buy gold and other assets or instruments for exactly the same reason. The distinction lies in the fact that gold, shares, property, and bonds serve practical purposes in society beyond their role as investments. As a result, the assets carry a sustained foundation and inherent value. Even better is when those assets can generate income. Whether Bitcoin has durability as a genuine asset class is still very much an open question.
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Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Investors risk losing some or all of their capital invested. Past performance is not a reliable indicator of future performance.