Vanguard, the world’s second-largest asset manager, enabled trading of Bitcoin exchange-traded funds (ETFs) and other crypto-related products on its platform in early December. However, the company’s overall view of the cryptocurrency and digital asset industry doesn’t seem to have changed much over time.
Therefore, the reversal of long-standing positions on Bitcoin and other cryptocurrencies appears to be purely a business decision rather than a change in belief. The revelation was made by one of the trillion-dollar company’s chief executives at a Bloomberg conference on Thursday, Dec. 11.
No evidence BTC technology brings economic value: Vanguard Head of Quant
John Amerix, Vanguard’s global head of quantitative equities, revealed that the asset management firm’s view on cryptocurrencies has not changed, despite recently giving investors access to Bitcoin ETFs, Bloomberg reported. The senior investment executive likened BTC to a speculative “digital lab,” or a collection of coveted stuffed animals.
Americus argued that Bitcoin could be viewed as a speculative collectible rather than a productive asset because it lacks the return, compounding, and cash flow characteristics that Vanguard typically checks for in long-term investments. The global head of quant said there is no clear evidence that Bitcoin’s underlying technology will deliver lasting economic value.
This less-than-optimistic view of cryptocurrencies is why Vanguard has refrained from issuing its own crypto-linked exchange-traded fund. However, the asset management company welcomed select cryptocurrency funds to its platform earlier this month after seeing the US-based Bitcoin ETF’s track record of success since its launch.
Americus said in a separate interview at the Bloomberg conference:
We allow people to hold and buy these ETFs on our platform if they wish, but we do so in a discreet manner. We are not going to give them advice on what to buy or sell or which crypto tokens to hold. That’s not what we’re trying to do at this point.
Nevertheless, Vanguard’s global head of quantitative equities acknowledged that he believes Bitcoin has the potential to offer non-speculative value in certain situations. The CEO cited a high inflation environment and a period of political instability as some of those scenarios.
The Americans concluded:
If we can see reliable price movements in such situations, we can speak more intelligently about what the investment theory is and what role it can play within the portfolio. But you just don’t have it yet, the history is still too short.
Bitcoin price overview
BTC price has been in a continuous downward trend over the past few months and is nearly 30% off its all-time high of $126,080. As of this writing, the value of this top-tier cryptocurrency is around $90,380, reflecting a drop 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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