Vanguard, the world’s second-largest asset management company, activated trading in Bitcoin exchange-traded funds (ETFs) and other cryptocurrency-related products on its platform in early December. However, the company’s overall views on the cryptocurrency and digital asset industry do not appear to have changed much over time.
Therefore, the reversal of long-held positions on Bitcoin and other cryptocurrencies appears to be purely a business decision rather than a change in belief. The revelation came from one of the trillion-dollar company’s top executives at the Bloomberg conference on Thursday, December 11.
No Evidence BTC’s Technology Delivers Economic Value: Vanguard’s Quant Head
According to a Bloomberg report, Vanguard’s global head of quantitative assets, John Ameriks, said the asset management firm’s views on the cryptocurrency remain unchanged despite recently giving investors access to the Bitcoin ETF. A senior investment executive likened BTC to a speculative “digital rabooboo,” a popular plush toy collectible.
Ameriks hypothesized that Bitcoin could be viewed as a speculative collection asset rather than a productive asset because it lacks the income, compounding and cash flow properties that Vanguard typically sees in long-term investments. The global head of quant said there is no clear evidence that Bitcoin’s underlying technology provides lasting economic value.
The reason Vanguard refrained from issuing its own exchange-traded fund linked to cryptocurrencies is because of its not-so-optimistic views on cryptocurrencies. However, the asset management firm welcomed select cryptocurrency funds to its platform earlier this month after seeing the US-based Bitcoin ETF’s successful track record since launch.
Ameriks said in a separate interview at the Bloomberg conference:
We allow people to hold and purchase these ETFs on our platform if they wish, but doing so is at their discretion. We will not give them advice on whether to buy or sell or which cryptocurrency tokens they should hold. That’s not what we want to do now.
Nonetheless, Vanguard’s global head of quantitative assets acknowledged that Bitcoin has the potential to offer non-speculative value in certain circumstances. The chief executive listed a high inflation environment and a period of political instability as some of those scenarios.
Ameriks concluded:
If you can see the stable movement of prices in such situations, you can talk more intelligently about what the investment thesis is and what role it could play in your portfolio. But we don’t have that yet. There is still too little history.
Bitcoin price at a glance
The BTC price has been in a continuous downward trend over the past few months, remaining almost 30% off its all-time high of $126,080. As of this writing, the top cryptocurrency is worth around $90,380, reflecting a decline of more than 2% over the past day.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from Vanguard, chart from TradingView
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