XRP and Bitcoin (BTC) were pitted against each other in a recent analysis, with market expert X Finance Bull revealing what early investors could have gained if they had invested $500 into both XRP and BTC in 2014. The analysis compares the performance of both cryptocurrencies over the years, highlighting the factors behind XRP’s growth and sustained momentum.
What $500 In Bitcoin And XRP in 2014 Is Worth Today
A new analysis by X Finance Bull reveals the dramatic growth potential of early investments in Bitcoin and XRP. According to the report, a $500 investment in XRP at the 2014 lows would be worth approximately $255,000 today. He compares XRP’s gains with those of Bitcoin, noting that if investors had bet the same amount in BTC in 2014, their investments would have grown to around $133,000.
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These figures suggest that XRP outperformed Bitcoin by more than twice over the same period, delivering a 511-fold return, compared to BTC’s 266-fold gain. During that time, XRP’s performance benefited not only from early, steady adoption and speculative interest but also from the continued development of its underlying payment system.
Over the years, XRP has moved beyond a purely speculative asset, gaining more traction as it evolves into a potential global settlement layer. Sharing similar sentiments, X Finance Bull highlighted how XRP’s infrastructure developments have significantly supported its significant price growth today. He noted that the cryptocurrency has seen major progress in areas such as Exchange-Traded Funds (ETFs), banking licenses, and enterprise-level adoption.
Notably, XRP Spot ETFs officially launched in November 2025, attracting massive inflows that have significantly boosted demand for XRP among institutional investors. In addition, the Office of the Comptroller of the Currency (OCC) has conditionally approved Ripple’s application to establish a national trust bank charter. All of these developments have contributed to XRP’s price growth over the past few months.
In his post, X Finance Bull suggested that investors who held onto their XRP positions through the volatile years “know why they held.” Following the cryptocurrency’s dramatic rally above $3, many investors reaped the rewards of staying invested from its lows and trusting in its potential for future price appreciation.
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From 2018 to 2025, XRP struggled with a lawsuit filed by the US Securities and Exchange Commission (SEC). During those years of legal turmoil, many investors continued to hold onto their XRP despite the uncertainty and price stagnancy.
Following Ripple’s legal win, XRP surpassed $3 in 2025, marking its first break above that level since 2018. Compared to XRP, Bitcoin has also experienced significant growth in the past few years. After crossing the $100,000 threshold in 2024, BTC continued its surge into 2025, finally hitting a peak above $126,000 in October.
BTC trading at $66,670 on the 1D chart | Source: BTCUSDT on Tradingview.com
Featured image from Shutterstock, chart from Tradingview.com
Crypto analyst Chad Steingraber has sparked both excitement and skepticism in the crypto community with a bold prediction for the XRP price. According to his technical analysis, XRP could surge to an astonishing $220 solely due to the impact of its Exchange-Traded Funds (ETFs). He draws a parallel with Bitcoin’s historic price spike following its spot ETF launch, suggesting that institutional adoption and market enthusiasm could drive a similar meteoric rise for XRP. While the bold claim has caught the interest of market participants, questions remain about whether this projection is realistically achievable.
XRP Price To Reach $220 From ETF Influence
On Wednesday, Steingraber shared his bullish XRP price forecast on X social media, suggesting that the cryptocurrency could experience an explosive surge to $220 depending on the results of its ETFs. He bases this striking prediction on the potential impact of institutional inflows, arguing that the launch of major XRP ETFs could dramatically increase XRP’s demand and price.
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Steingraber has based his XRP price projection on Bitcoin’s post-ETF launch performance in 2024. He pointed out that the BTC price roughly doubled in value during the first year after its Spot ETF debut, driven by strong institutional adoption, market enthusiasm, and broader momentum.
Using this as a benchmark, the analyst compares both the absolute and percentage gains of Bitcoin to estimate that XRP could experience a similar surge in value. He believes that with the potentially massive inflows set to come from XRP ETFs, the current price of the cryptocurrency could multiply by 100x to reach $220.
Steingraber has highlighted the Canary XRP ETF, XRPC, which recorded massive consecutive inflows this month and became one of the most successful ETF launches in 2025, as evidence of growing institutional interest. He described XRPC as a “warning shot,” signaling the arrival of other major players in the market.
ETF Inflows To Consume Supply, Amplifying Price Pressure
In a separate analysis, Steingraber examined the potential effects of ETF inflows on XRP’s supply and price. He envisioned a scenario where multiple funds collectively acquire over $1 billion worth of XRP in a single day, which is equivalent to more than 229 million XRP. Extending this hypothetical situation, he calculated that weekly ETF activity could absorb over 1.14 billion XRP, while monthly accumulation could exceed 4.58 billion XRP.
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In about six months, he surmised that ETF demand could theoretically purchase nearly 27.5 billion XRP, an amount large enough to consume a significant portion of the cryptocurrency’s circulating supply. Additionally, Steingraber’s projection highlights the potential structural pressure that institutional ETFs could exert on the altcoin’s price.
Even without price appreciation, the analyst suggests that the scale of potential ETF inflows could create supply constraints that could drive upward momentum. Additionally, he predicts that the collective ETFs could drain the entire public supply within one year.
XRP trading at $2.11 on the 1D chart | Source: XRPUSDT on Tradingview.com
Featured image from iStock, chart from Tradingview.com
Financial advisors seeking to diversify client portfolios with cryptocurrencies—without stepping away from traditional equities—may soon have a new vehicle to do so.
On September 26, asset manager Cyber Hornet submitted filings to the US Securities and Exchange Commission (SEC) for three crypto-linked exchange-traded funds (ETFs). Each fund is designed to blend exposure to the S&P 500 Index with Ethereum (ETH), Solana (SOL), and XRP.
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According to the filing, each fund will allocate 75% of its portfolio to companies within the S&P 500. The remaining 25% will be dedicated to its respective digital asset or its associated futures market.
Cyber Hornet has proposed the ticker symbols EEE for Ethereum, SSS for Solana, and XXX for XRP. Each fund will carry a 0.95% management fee.
Market observers said the Cyber Hornet funds aim to give investors a middle ground between the resilience of large-cap US equities and the growth potential of digital assets.
They believe this structure helps investors capture crypto’s upside while staying anchored in traditional markets. This approach reflects a growing recognition of digital currencies as viable portfolio components, not speculative outliers.
Cyber Hornet’s move builds on its earlier success with a Bitcoin 75/25 fund, which delivered a 39% return in 2024. The crypto ETF ranked among Morningstar’s top performers in the Large-Blend category.
That success may help justify expanding the strategy to other tokens like ETH, SOL, and XRP. Notably, investor interest in diversified crypto exposure has grown substantially over the past year, reinforcing the case for broader adoption.
STORY: There are “a lot of great small cap names and that space where you got to be a stock picker, you gotta pick the right ones. But when you do, there’s a lot of alpha to be generated and there’s a huge pot of cash,” according to Morris who recommends investors consider exchange traded funds that invest in this area which gives “you an opportunity to let someone else do some of that underwriting and stock picking for you. It’s a tough space out there. You do need to be good at figuring out where is the science going, plus what’s going to behave like a good stock.”
Exchange-traded fund inflows have already topped monthly records in 2024, and managers think inflows could see an impact from the money market fund boom before year-end.
“With that $6 trillion plus parked in money market funds, I do think that is really the biggest wild card for the remainder of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it be flows into REIT ETFs or just the broader ETF market, that’s going to be a real potential catalyst here to watch.”
Total assets in money market funds set a new high of $6.24 trillion this past week, according to the Investment Company Institute. Assets have hit peak levels this year as investors wait for a Federal Reserve rate cut.
“If that yield comes down, the return on money market funds should come down as well,” said State Street Global Advisors’ Matt Bartolini in the same interview. “So as rates fall, we should expect to see some of that capital that has been on the sidelines in cash when cash was sort of cool again, start to go back into the marketplace.”
Bartolini, the firm’s head of SPDR Americas Research, sees that money moving into stocks, other higher-yielding areas of the fixed income marketplace and parts of the ETF market.
“I think one of the areas that I think is probably going to pick up a little bit more is around gold ETFs,” Bartolini added. “They’ve had about 2.2 billion of inflows the last three months, really strong close last year. So I think the future is still bright for the overall industry.”
Meanwhile, Geraci expects large, megacap ETFs to benefit. He also thinks the transition could be promising for ETF inflow levels as they approach 2021 records of $909 billion.
“Assuming stocks don’t experience a massive pullback, I think investors will continue to allocate here, and ETF inflows can break that record,” he said.
For Baird Advisors co-chief investment officer Mary Ellen Stanek, success in fixed income isn’t about hitting home runs. Instead, it’s important to have “a really high batting average,” the 45-year industry veteran told CNBC. “We don’t think this is an asset class where you’re paid typically to hit home runs,” she said. “If you think about those big home run hitters, often they also have very high strikeout percentages — and that’s the thing we’re trying to avoid.” Instead, Stanek strives for consistency. She takes a duration neutral approach, setting the duration equal to that of the benchmark each fund follows. The team then spends its energy on areas they believe have a higher probability of adding value — looking at yield curve positioning, sector allocation and individual security selection, she said. The result has been extremely competitive track records, said Stanek, who, as co-CIO, oversees $136.5 billion in fixed income assets, as of March 31. “There’s a lot of value that we’ve created for investors with a predictable, and we would argue, a smoother ride than most products,” she said. That success can be seen in funds like the Morningstar five-star, gold-rated Baird Aggregate Bond Fund . Institutional shares, which trade trade under ticker BAGIX, have a 30-day SEC yield of 4.36% and expense ratio of 0.30%. Investor shares, which trade under ticker BAGSX, have a 4.11% 30-day SEC yield and 0.55% expense ratio. BAGSX 1Y mountain Baird Aggregate Bond Fund, investor shares Since BAGIX’s inception in 2000, it has seen a 4.74% annualized gain through March 31, 2024, according to Baird. During that time, it beat its benchmark — the Bloomberg U.S. Aggregate Index — by 66 basis points, the firm said. It also sits in the top quintile among its peers, per Morningstar . One basis point equals one-hundredth of a percentage point. From bear market baby to industry accolades Stanek’s investment philosophy has been honed throughout her years of experience. She grew up the daughter of a banker and worked college summer breaks at her father’s community bank. That experience helped her land her first post-college job in fixed income in 1979 at First Wisconsin Trust. That was just as interest rates began to move sharply higher and became very volatile. By July 1981, the yield on the 10-year Treasury hit 15.82% “We grew up as bear market babies in a hyper-risk environment, where we really had to get very, very sharp about both understanding the risk we had, and then the calibration of the opportunity versus the risk,” Stanek said. A few years later, she was promoted to chief investment officer. In 1985, she launched her duration neutral strategy and hasn’t looked back. In 2000, she was among the leaders who founded Baird Advisors. The team runs a number of fixed income funds in addition to the Baird Aggregate Bond Fund, including the Morningstar five-star rated Baird Intermediate Bond Fund. The product was one of the top performing actively managed bond funds in 2023, according to Morningstar. BIMSX 1Y mountain Baird Intermediate Bond Fund, investor shares “It’s our job to deliver both a competitive product and attractive returns, but also in a format and understandable that you can understand the risks we’re taking, and that you can feel comfortable and confident and sleep better at night,” Stanek said. Along the way, she has also collected accolades, including being named to Pensions & Investments’ 2023 Influential Women in Institutional Investing , and in 2022 being crowned outstanding portfolio manager by Morningstar. Where she sees opportunity now Stanek and her team are being very selective right now as credit spreads have gotten tighter. The allocation to Treasurys has gone slightly up in the portfolios, while credit has dipped a bit. “We’re placing new money selectively, selling when things have gotten too tight in our opinion, and being very patient, making sure we’re keeping dry powder in the portfolios for better opportunities,” she said. Within bonds, investors should consider going out the curve, she said. With the yield curve still inverted, short-term term Treasury bills are yielding over 5%. “While that’s attractive, don’t get caught,” Stanek cautioned. “At some point, the curve will right itself and short rates will drop, and then you’ll be sorry that you didn’t lock in these higher yields for a longer period of time,” she said. Stanek suggests doing annual reviews of your portfolio to determine if the asset allocation still makes sense. For those with a longer-term horizon who want to move out the curve, do it in stages, she said. “A lot of people will be immobilized if it’s that big one-time decision,” Stanek said. “Get a plan and maybe you do it in three tranches, or … a chunk every quarter, and know fully that you’re continuing to move out the curve in a methodical way.” She also sees some opportunities within securitized products, such as residential and commercial agency mortgage-backed securities , as well as AAA-rated non-agency MBS assets. “The securitized sectors that tend to be higher quality generally continue to offer pretty good value,” she said. “But very selective — we are bottom]-up investors.” Diversification is also important because as good as yields are right now, there is a long list of things that could potentially go wrong, Stanek said. It all comes down to managing risk carefully, she said. “At times, we say to ourselves, we’ve seen this movie before,” Stanek said. “If we’re not being paid to take on more risk in the portfolios, it’s OK if we continue to look for higher-quality spots to invest in and be patient and wait for better relative risk, relative value.”
Last week, Ethereum welcomed the Dencun upgrade, leading to a reduction in transaction fees across several layer-2 protocols. Bitcoin (BTC) slipped below the $65,000 mark while spot Bitcoin ETFs continued to hit new records, clinching a peak trade volume.
Ethereum welcomes Dencun
The Dencun upgrade finally went live on the Ethereum network, marking the start of “The Spurge.” Notably, the update went live on March 13, exactly as scheduled by developers.
Shortly after Ethereum witnessed the implementation of the upgrade, crypto.news reported a massive reduction in average transaction fees across multiple Ethereum layer-2 protocols.
Zora saw a 99% drop in average cost to $0.003 on March 14, while Optimism recorded a 98.8% collapse to $0.035 within the same timeframe. Base also witnessed a similar decline in fees to $0.035 per transaction.
Arbitrum’s fees remained with the same level, as the protocol decided not to implement blobs yet. Instead, they revealed plans to implement blobs through the imminent ArbOS update.
MicroStrategy augments Bitcoin bag
Reports from the start of the week suggested that MicroStrategy had augmented its Bitcoin holdings, procuring $821 million worth of the crypto asset amid its price discovery phase.
The broader crypto market witnessed a rollercoaster ride this week. Bitcoin began the week strong, eventually soaring to a new all-time high of $73,750 on March 14 amid intense accumulation from long-term holders and whales.
The rest of the market rode on the sustained uptrend, leading to a rapid spike in the global crypto market cap. Dogecoin (DOGE) also took center stage when it rallied 11% after Elon Musk’s said the asset could be leveraged as a payment method for Tesla.
DOGE and the rest of the market fell as BTC faced intense selling pressure above the $73,000 mark. The leading crypto asset slumped to a low of $67,000 on March 15, with ITB analysts warning of a steeper correction.
Bitcoin’s correction spilled into the next day, with the asset collapsing below $65,000 on March 16 to hit a 10-day low of $64,780. However, BTC found a floor at this price, subsequently recovering above $67,000.
Market watchers remain optimistic. Kevin Svenson, a veteran trader, expects BTC to reach $83,000 after the halving slated for next month.
Solana, BOME buck the trend
Solana (SOL) and its ecosystem meme tokens, including Book of Memes (BOME), continued to record massive gains despite the market-wide downtrend.
Solana saw an impressive 10% gain in the space of 24 hours, with some of its associated meme coins, such as Jupiter (JUP) and dogwifhat (WIF) seeing rapid surges.
Book of Memes, a new Solana-based meme coin launched on March 14, also rode on the uptrend in the Solana ecosystem. The asset spiked 345% in the 24 hours leading to March 16, and by 39,000% from March 14 to 16.
Spot Bitcoin ETFs continue to see record figures
The spot Bitcoin ETF market garnered significant attention this week, as the investment products sustained demand. The previous week was a success, as reports from March 11 confirmed that the crypto market saw a record $2.7 billion inflow last week.
Spot Bitcoin ETFs continued to break records, seeing the purchase of 14,261 Bitcoin tokens on March 12. This overshadowed the 900 BTC produced by miners that day.
Market specialists at Bitcoin mining firm Luxor Technology revealed that investors have pivoted from crypto mining stocks to these products. Despite the demand, Vanguard’s outgoing CEO remained bearish on the products.
Craig Wright is not Satoshi, UK court rules
In the COPA vs. Craig Wright case, the U.K. High Court ruled that Wright is not Bitcoin founder Satoshi Nakamoto despite his persistent claims.
COPA’s aim was to prevent Wright from filing further lawsuits against community figures for debunking his claims. This week, the U.K. court ruled that evidence points to the fact that Craig Wright is not Satoshi.
Ripple (XRP) appears to be laying the groundwork for a future XRP exchange-traded fund (ETF).
A recent job opening for a Senior Manager for Business Development at Ripple listed a key responsibility: “drive cryptocurrency-related ETF initiatives with internal trading teams and relevant partners.” This has led some in the crypto community to wonder whether the blockchain payments company is aligning its strategy with the evolving crypto landscape.
This development surfaces as Ripple navigates through a high-profile legal tussle with the U.S. Securities and Exchange Commission (SEC), which many speculate could eventually lead to clearer regulations and the much-anticipated approval of other crypto ETFs besides the Bitcoin spot ETF.
The crypto analytics community and industry reporters have been quick to dissect the implications of this role. On Jan. 27, the cryptocurrency insights forum, Good Morning Crypto, took to X to highlight the possible significance of the little tidbit contained within the small print of the advertised position.
🚨 JUST IN: Ripple is on the lookout for a Senior Manager for Business Development in New York! 🏙️
🌐 Job description drops a hint: “Drive cryptocurrency-related ETF initiatives.”👀📈
Could this mean an $XRP ETF is closer than we had imagined? 🤔🚀
Eleanor Terrett of Fox Business subsequently commented on Good Morning Crypto’s post, noting that the recruitment of such an expert could represent a preliminary move toward establishing an XRP ETF.
However, Terrett pointed out the necessity of a Ripple futures ETF as a precursor to the approval of an XRP spot ETF.
In order to have an $XRP spot ETF, there will first need to be a futures ETF.
Part of getting the $BTC spot ETFs approved was the @SECGov concluding that the CME bitcoin futures market would suffice to provide surveillance for fraud and manipulation.
She drew attention to the precedent set by the approval of Bitcoin futures by the Chicago Mercantile Exchange (CME), which was crucial for the SEC to greenlight Bitcoin spot ETFs.
Crypto journalist Colin Wu echoed Terrett’s sentiment, emphasizing the significance of the job posting in anticipation of an XRP ETF application.
Bloomberg’s James Seyffart previously highlighted the need for having XRP futures listed on a significant derivatives exchange, such as CME, before the SEC’s approval of an XRP ETF. The rationale is that the presence of XRP on CME would provide an underlying asset for the ETF to track, which is a critical requirement for ETF approval.
XRP’s performance over the broader timeframe underscores the challenges it faces amid the ongoing regulatory debate. Over the last 30 days, per data from CoinGecko, the coin has lost more than 16% of its value. It also registered a 7.3% price drop in the previous fortnight and a 3.2% loss over the last seven days.
However, in the past 24 hours, the price of XRP has gone up by a modest 1%, a change accompanied by a 24-hour trading volume of $637.9 million.
Michael Sonnenshein at the 2022 Forbes Iconoclast Summit at New York Historical Society on Nov. 3, 2022.
Arturo Holmes | Getty Images Entertainment | Getty Images
DAVOS, Switzerland — Grayscale Investments CEO Michael Sonnenshein told CNBC that most of the approved bitcoin exchange-traded funds won’t survive, while defending the highest fees in the market for the company’s own product.
When the U.S. Securities and Exchange Commission approved a swathe of spot bitcoin ETFs earlier this month, much focus was on the management fees that firms from BlackRock to Fidelity were charging.
Many of the ETF issuers were charging 0% fees for a limited amount of time before raising them slightly. Most of the approved ETFs have fees of between 0.2% and 0.4%.
But the Grayscale Bitcoin Trust ETF charges a 1.5% fee.
Sonnenshein laid out several reasons why it is charging that fee, including the fact it is the largest bitcoin fund, has a 10-year track record of “operating successfully” and has a diversified investor base.
“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” Sonnenshein told CNBC in an interview at the World Economic Forum in Davos on Thursday.
Sonnenshein said the reason other ETFs have lower fees is that the products “don’t have a track record” and the issuers are trying to attract investors with fee incentives.
“I think from our standpoint, it may at times call into question their long-term commitment to the asset class,” Sonnenshein said.
The Grayscale CEO said two to three of the spot Bitcoin ETFs “will maybe obtain some kind of critical mass” of assets under management, but that the others may be pulled from the market.
“I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” Sonnenshein said.
The Securities and Exchange Commission on Friday said that a social-media post on X falsely stating that it had approved spot bitcoin exchange-traded funds was created after an “unauthorized party” obtained control over the phone number connected with the agency’s account on the platform.
The markets regulator said its staff would “continue to assess whether additional remedial measures are warranted” in the wake of the breach, which occurred Tuesday and raised questions about cybersecurity at both the agency and the social-media platform, formerly known as Twitter.
The agency said it was coordinating with law enforcement on the matter, including with the FBI and the Department of Homeland Security.
“Commission staff are still assessing the impacts of this incident on the agency, investors, and the marketplace but recognize that those impacts include concerns about the security of the SEC’s social media accounts,” the SEC said in a statement.
The confusion began on Tuesday afternoon, when the hacked post appeared on the SEC’s X account.
“Today the SEC grants approval for #Bitcoin ETFs for listing on registered national securities exchanges,” the post read. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”
A second post appeared two minutes later that simply read “$BTC,” the SEC noted in its statement. The unauthorized user soon deleted that second post, but also liked two other posts by non-SEC accounts, according to the agency. The price of bitcoin BTCUSD, -0.71%
rose sharply in the wake of the posts, before soon pulling back.
In response to the hack, SEC staff posted on the official X account of SEC Chair Gary Gensler announcing that the agency’s main account had been compromised, and that it had not yet approved any spot bitcoin exchange-traded products. Staff then deleted the initial unauthorized post, un-liked the liked posts and used the official SEC account to make a new post clarifying the situation, the agency said Friday.
The SEC also said that it had reached out to X for assistance Tuesday in the wake of the incident, and that agency staff believe the unauthorized access to the SEC’s account was “terminated” later in the day.
“While SEC staff is still assessing the scope of the incident, there is currently no evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts,” the agency said.
Wednesday’s move marked a breakthrough for the crypto industry, which for years has tried to get such ETFs off the ground in hopes of drawing more traditional investors to the digital-asset space.
Bitcoin was down 7.6% over a 24-period as of Friday evening.
After long-awaited spot bitcoin exchange-traded funds made their debut this week,investors are now weighing the prospects of eventual approval of similar ether ETFs.
The U.S. Securities and Exchange Commission on Wednesday greenlighted 11 spot bitcoin BTCUSD, -1.58%
ETFs for the first time. The products, which made its debut trading on Thursday, logged a relatively strong first day.
However, bitcoin fell 6.8% on Friday, leaving it with a 3.2% gain over the past seven days, according to CoinDesk data. It underperformed ether ETHUSD, +1.82%,
which rose 17.6% over the past seven days while it declined 1.2% on Friday.
The news about bitcoin ETFs was mostly priced in, while investors are now looking past it to a potential approval of ether ETFs, analysts said.
“I see value in having an ETH ETF,” Larry Fink, chief executive at the world’s largest asset manager BlackRock, told CNBC’s Squawk Box on Friday. BlackRock, which just launched its iShares bitcoin Trust IBIT,
in November filed an application for a spot ether ETF.
“It’s hard to know exactly what the U.S. regulators would do” about ether ETF applications, said Alonso de Gortari, chief economist at Mysten Labs, an internet infrastructure company.
However, “I would expect that once you open the door, it becomes easier and I think the industry is very excited about it,” de Gortari said. If bitcoin ETFs see an impressive institutional inflow in the coming months, it could make such products more established and set a good precedent for other crypto ETF applications, he said.
The enormous competition and huge inflows into bitcoin ETFs will only boost investors’ interests in an ether ETF, according to Paul Brody, EY’s global blockchain leader. “There’s no doubt that ETH is the next big market and has immediately become a priority for financial services companies,” Brody said in emailed comments.
Compared with bitcoin, the Ethereum blockchain offers more utility and has unique advantages, noted Fadi Aboualfa, head of research at digital assets custodian Copper.
Sandy Kaul, head of digital asset and industry advisory services at Franklin Templeton, said she eventually expects the arrival of ETFs that track a basket of cryptocurrencies. Such products, instead of those based on single crypto, would dominate the space if they are approved, she said.
“Just like the S&P 500 has 500 stocks in it, right? You don’t have just one stock.” Kaul said in a phone interview. The arrival of a bitcoin ETF, is just a “baby step into really beginning to think about the future market structure of crypto,” Kaul added.
However, not everyone is that optimistic. Will McDonough, founder and chairman of Corestone Capital, said the approval of an Ethereum ETF has “a long way to go.”
SEC chairman Gary Gensler previously said bitcoin was the only cryptocurrency he was prepared to publicly label a commodity, rather than a security.
The agency also went after companies that offered crypto staking, which allows investors to earn yields by locking their coins to secure blockchains such as Ethereum. The SEC shut down crypto exchange Kraken’s staking business in the U.S. last year.
One possibility is that “companies will be able to offer an ETH ETF, but they will not be allowed to stake that ETH and earn yield,” noted EY’s Brody.
Cryptocurrency bulls say bitcoin could surge to more than $100,000 this year after the U.S. Securities and Exchange Commission made a pivotal step to approve the first-ever U.S. spot bitcoin exchange-traded fund.
Several crypto investors CNBC spoke with said they see the world’s top cryptocurrency rising in 2024, as the effects of approval of a bitcoin ETF, which would diversify the range of investors that can gain exposure to the cryptocurrency, begin to become more apparent.
Bitcoin’s price hasn’t moved a great deal since the news of the SEC ETF approval came in, which saw the agency give 11 products the green light.
The regulator approved rule changes to allow the creation of the ETFs, but stressed that this move “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”
Prices reacted to that substantially since the SEC’s move Wednesday. Bitcoin’s price was trading at $46,118 apiece Friday, down around 0.4%.
ETFs allow more retail investors to hold bitcoin indirectly via a share traded on a stock exchange. Investors expect acceptance of the token could begin to become more mainstream with more and more institutions like BlackRock, Fidelity, and others offering these products.
Anthony Scaramucci, founder of SkyBridge Capital, said he’s been increasing his exposure to bitcoin, ethereum, solana and other cryptocurrencies over the past year.
“I think this is a really big breakthrough for bitcoin as a digital asset, it’s a much broader story for digital property in general,” Scaramucci told CNBC’s Arjun Kharpal at the CfC conference in St Moritz. “I think bitcoin will probably see its all-time high at the end of the year, and is likely to go through its all-time high by the end of the year.”
As for what price Scaramucci expects for bitcoin, the noted investor said he sees the cryptocurrency hitting $100,000 over the next year.
“Could bitcoin be $100,000, which is more or a little bit more than a double over the next year? I do believe that.”
But he made a caveat: “I have been wrong so many times before.”
He compared the token’s ETF approval to the 2004 green lighting of the first spot gold ETF. That development took years to translate into major price gains, but gold eventually skyrocketed in value.
The precious metal is now worth around $1,592.76, up around 556% since 2004 when the SPDR Gold Shares ETF began trading. Crypto bulls expect a similar direction of travel for bitcoin — except it’ll be much quicker this time around.
“We see it as digital gold,” Scaramucci told CNBC. “If you look at the market cap of gold, $13 trillion, there’s no reason why bitcoin couldn’t be 50% or 60% of that market capitalization. So that implies a 10x price over then next decade.”
Many crypto investors have compared bitcoin with gold in the past. But it’s worth noting that, while backers believe they have similar qualities — like a finite supply and immunity to external economic and geopolitical headwinds — bitcoin hasn’t exactly passed the mark as “digital gold.”
Past price performance over the past few years has shown bitcoin trades in correlation with stocks, in particular the tech-heavy Nasdaq, rather than gold.
Bitcoin did massively outperform the Nasdaq in 2023, many other risk-assets, and gold in 2023.
But the cryptocurrency primarily got a boost from speculation that the Federal Reserve would dial back its aggressive interest rate rises, which would be supportive for risk assets like cryptocurrencies.
Vijay Ayyar, vice president of international for Indian crypto exchange CoinDCX, said ETF approvals had been “priced in for some time now.”
Bitcoin’s already gone from about $25,000 to nearly $47,000 since October.
“The next leg up is when we start seeing Bitcoin purchases for the ETF itself,” Ayyar said. That could happen in the next week or two.”
“If sentiment is to be believed, we are potentially looking at an accelerated move to new all-time highs some time this year, given we also have the Bitcoin halving coming up in April this year,” Ayyar added.
If bitcoin were to reach those levels, it would mark a turnaround for an industry that’s been in the doldrums since the collapse of FTX, the once $32 billion crypto exchange, in 2022. FTX’s founder Sam Bankman-Fried was found guilty of all seven criminal counts brought against him by federal prosecutors in the U.S. last year.
In 2022, bitcoin was already falling sharply, with sky-high inflation and higher interest rates knocking prices of digital currencies across the board.
But FTX’s collapse caused deep distrust in the crypto industry among consumers, business players in the industry and regulators, as one of the largest names in the field was exposed for using assets it held on behalf of customers to make risky trades in other crypto assets and risky crypto-linked derivatives.
The crypto market saw a little over $2 trillion erased from its market capitalization, as investors got cold feet and abandoned digital tokens en masse.
In 2023, however, it was a different story. Bitcoin’s price rose more than doubled for the year, with the token’s price climbing some 152%. Other digital tokens also saw price gains. Ether roughly doubled in price, and XRP, solana, and ada also made strong gains.
“2022 was the worst year for us [but] 2023 happened to be the best year for us. So it’s been the best and worst of times,” Scaramucci said.
Also in 2023, Binance CEO and founder Changpeng Zhao pleaded guilty to criminal charges and stepped down as the company’s CEO as part of a $4.3 billion settlement with the Department of Justice. Many crypto investors see this as a chance to move forward and draw a line under bad behavior in the industry.
Industry executives are calling the start of another bull run. They say that, on top of the approval of a bitcoin ETF, the bitcoin “halving” is a factor that will drive gains in 2024.
The halving, which happens every four years, is an event written in bitcoin’s code. The rewards so-called miners get for mining bitcoin is cut in half. This keeps a cap on the supply of bitcoin, of which there will only ever be 21 million. In previous price cycles, halving preceded a rise in the price of bitcoin.
Tim Draper, founder of Draper Associates, believes the bitcoin halving — along with other factors — could spur the price of bitcoin to hit $250,000 by July.
The billionaire investor said he sees increased bitcoin adoption among mainstream investors and the token’s much-anticipated halving event driving it to a new all-time high.
“The halvening, more usage of a currency that is decentralized, trusted, global, [and that] stores value from anywhere,” are all factors that are supportive of bitcoin at the moment, Draper told CNBC.
A major part of Draper’s thesis is that women will drive the adoption of bitcoin in 2024 and beyond.
The investor told CNBC that women “will start to see the need to have at least some bitcoin in case of a run on dollars.”
It’s worth noting Draper, who first invested in bitcoin in 2014, has been wrong about the token’s price trajectory.
He told CNBC in late 2022 that he thought bitcoin would reach $250,000 by June 2023. Draper then said in July 2023 that investors will have to wait “a little longer (maybe 2 years) for bitcoin to hit his $250,000 target.
And despite successful bets on Tesla, Baidu and Skype, Draper’s broader venture investing track record hasn’t been pristine.
The investor once backed Theranos, the controversial blood-testing startup that collapsed after its founder Elizabeth Holmes was accused of defrauding investors. Rather than call her out, Draper doubled down on his support for the entrepreneur, saying he believed critics had “taken down another icon.”
But Draper isn’t the only investor bullish on bitcoin. Tom Lee, managing partner at Fundstrat Global Advisors, told CNBC’s “Squawk Box” on Wednesday that bitcoin could hit $150,000 in the next 12 months, and as much as $500,000 in five years.
And Meltem Demirors, chief strategy officer of CoinShares, told CNBC’s Arjun Kharpal she thinks bitcoin can reach the $100,000 mark — she made that comment before the ETF approval, in response to a question on a hack that led to the SEC falsely posting that it had approved the ETFs late Tuesday.
“I think we are going over six figures by the end of the year,” Demirors said, highlighting two key reasons: a bitcoin ETF approval and the so-called upcoming “halving” event.
On Wednesday, the U.S. Securities and Exchange Commission for the first time greenlighted several exchange-traded funds investing directly in bitcoin.
But the 24 hours leading up to that approval were chaotic, to say the least.
The SEC approved the launch of 11 bitcoin BTCUSD, +0.09%
ETFs, according to a filing posted on the regulatory agency’s website. The ETFs are due to start trading on Thursday.
On Tuesday, however, the SEC’s official account on X, formerly known as Twitter, published what the agency described as an “unauthorized” post indicating that it had approved the spot bitcoin ETFs. In reality, the regulator had not approved any such ETFs as of Tuesday and its X account had been “compromised,” SEC Chair Gary Gensler said on the social-media platform. The SEC subsequently deleted the unauthorized post.
The agency found “there was unauthorized access to and activity on” the its X account by “an unknown party,” an SEC spokesperson said on Tuesday, adding that the “unauthorized access has been terminated” and that the SEC would work with law enforcement to investigate the matter.
Bitcoin’s price briefly shot 2% higher after the unauthorized tweet went out on Tuesday before soon pulling back.
Then on Wednesday, shortly before the U.S. stock market closed for the day, the SEC posted an actual approval order of bitcoin ETFs on its website — but the link was soon broken, leading to an “error 404” page. The same filing was later reposted by the SEC.
It is unclear why the first link was broken. A SEC spokesperson did not respond to an email seeking comment on the matter.
The events of the past 24 hours have proven “a bit embarrassing” for the SEC, especially as the agency has stressed that cryptocurrencies are exceptionally risky and vulnerable to market manipulation, according to Greg Magadini, director of derivatives at Amberdata.
Despite those warnings, Magadini said he doesn’t expect investors to be deterred from investing in the bitcoin ETFs.
Bitcoin has actually seen lower volatility on Tuesday and Wednesday than options traders had priced in, Magadini said. The crypto was up about 0.4% over the past 24 hours to around $46,400 on Wednesday evening, according to CoinDesk data.
Steven Lubka, head of private clients and family offices at Swan Bitcoin, echoed Magadini’s point, noting that the hiccups on the way to SEC approval are unlikely to impact investor interest in the funds.
“Ultimately, the SEC is not the one that launches the ETFs,” Lubka said in a call. “If anything, it shows how much attention is on these ETF products.”
The U.S. Securities and Exchange Commission voted Wednesday to allow mainstream investors to buy and sell bitcoin as easily as stocks and mutual funds, a decision hailed by the industry as a game changer.
The SEC decision clears the way for the first U.S. exchange-traded funds that hold bitcoin to be sold to the public. Expectations of U.S. regulatory approval for such funds drove the price of bitcoin to the highest level in about two years. The digital currency fell to just below $46,000 late Wednesday, up from $17,000 in January 2023.
Filip Radwanski | Sopa Images | Lightrocket | Getty Images
Bitcoin had a huge rally in 2023, with the digital currency up some 152% for the year.
And a number of commentators CNBC spoke to — both inside and outside of the cryptocurrency industry — expect the rise to continue.
After hitting a record high in 2021, bitcoin had a rough 2022, which was marked by the collapse of high-profile projects, liquidity issues and bankruptcies.
Also in 2023, Binance’s Changpeng Zhao pleaded guilty to criminal charges and stepped down as the company’s CEO as part of a $4.3 billion settlement with the Department of Justice.
Now that those two high-profile cases are out the way, many cryptocurrency executives see it as a chance to move forward and draw a line under the bad behavior of two of the industry’s poster children.
The halving, which happens every four years, is an event written in bitcoin’s code. The rewards so-called miners get for mining bitcoin is cut in half. This keeps a cap on supply of bitcoin, of which there will only ever be 21 million. In previous price cycles, halving preceded a rise in the price of bitcoin.
Meanwhile, there is growing excitement that the U.S. Securities and Exchange Commission will approve the first ever bitcoin ETF, after years of opposition. This would mean investors can buy a product that tracks the price of bitcoin, without having to go on to an exchange and hold the digital currency directly. The industry is hoping this will draw in a wider range of investors, and in particular, large institutional investors.
With all of this excitement comes some quite bold predictions about bitcoin’s price. Here’s a selection of some of them.
In 2022, Mark Mobius correctly forecast bitcoin would drop to $20,000 when it was trading above $28,000. He had a price call of $10,000 thereafter, which he stuck to in 2023. However, that did not materialize, as bitcoin rallied.
For 2024, Mobius told CNBC that bitcoin could reach $60,000 by the end of the year.
“No rationale for that prediction,” Mobius said, except that a bitcoin ETF looks likely and “that has heightened interest” in the cryptocurrency.
Youwei Yang, chief economist of crypto mining firm Bit Mining, believes that bitcoin could reach a high of $75,000 by 2024.
Yang attributes the anticipated price rise to a bitcoin ETF being approved, leading to higher institutional investment in bitcoin, as well as May 2024’s bitcoin halving, which would result in the bitcoin supply being constrained.
“I anticipate the Bitcoin will be trading around $25K to $75K in 2024, and $45K to $130K in 2025,” Yang said in an emailed note.
“While high prices are possible, not all investors will profit due to market volatility and the human tendencies of fear and greed.”
Bitcoin’s price performance over the last year.
Yang said the ETF approval remains the biggest story for bitcoin in 2024 — though investors should hold a degree of caution on timing given the wounds left by collapses of major crypto firms like Luna and FTX, and as it is an election year when the topic of crypto is likely to become more of a political issue.
“Timing the market is hard, but a gradual approach — accumulating in bear markets and taking profits in bull markets — might be a more effective strategy for whom don’t have early-on accumulations.”
James Butterfill, head of research at CoinShares, said the landscape for digital assets is set for “significant change” in 2024, driven by the potential approval of bitcoin ETFs in the U.S.
“This long-awaited development is poised to expand the investor base for cryptocurrencies and integrate them more closely with traditional financial markets,” Butterfill told CNBC via email.
“Estimations suggest that a 20% investment increase from current assets under management (around US$3 billion) could potentially propel Bitcoin prices to US$80,000.”
Meanwhile, the scenario of central banks cutting interest rates could also “play a decisive role” in moving bitcoin higher, Butterfill added.
The market will be also looking at factors beyond the halving — which he considers already priced into bitcoin — that could influence the price of the digital coin further.
“Thus, while the halving is a known event, other elements, particularly the potential for interest rate reductions, are likely to be significant in shaping Bitcoin’s price in the future,” Butterfill said.
Antoni Trenchev, a noted bitcoin bull and co-founder of Nexo, a cryptocurrency exchange, believes bitcoin could hit $100,000 in 2024.
In 2022, he called for bitcoin to hit $100,000, but that didn’t happen. Instead, the price of bitcoin collapsed that year. He held off from any further price predictions.
But in a note in December, Trenchev reinstated his $100,000 call for 2024, citing the halving and potential approval of multiple bitcoin ETFs.
“My expectation for 2024 is that the twin-turbo boost from the Bitcoin halving & spot ETF approval should propel Bitcoin to $100,000, with the prospect of further highs in 2025,” Trenchev said in a note. “The road to $100,000 will be lined with unexpected potholes and double-digit declines as Bitcoin.”
Trenchev added that the biggest gains will come from digital tokens and projects “that aren’t even on the radar yet.”
In November, Standard Chartered doubled down on its $100,000 call for bitcoin made in April. The bank said this will be driven by the approval of numerous ETFs.
The halving will also be supportive for bitcoin, the bank said.
In 2022, University of Sussex professor of finance Carol Alexander had a fairly successful run of calling bitcoin’s future price.
She predicted bitcoin would slip to $10,000 in 2022. That year, bitcoin fell as low as around $15,480, according to CoinDesk data. For 2023, Alexander said bitcoin would rally as high as $50,000. Bitcoin reached a yearly high of roughly $44,700 in early December.
Alexander told CNBC that during the first quarter of 2024, bitcoin will trade within the $40,000 to $55,000 range, owing to “professional traders creating volatility.”
Alexander said settlement of those charges is likely in either the second or third quarter, after which ETFs will be approved and bitcoin’s price will rise to $70,000, a new all-time high.
The price after that depends on the abilities of the ETF providers, such as Blackrock and Fidelity, “to equip their market makers not only to create the ETFs, but also to defend price manipulations” on exchanges which create “excessive volatility.”
“Before end of 2024 price could exceed $100k, but only if Blackrock and Fidelity market maker algorithms have the ability to reduce volatility,” Alexander concluded.
Matrixport, which bills itself as a crypto financial services firm, released a note in November projecting that bitcoin would reach $63,140 by April 2024 and $125,000 by the end of next year.
“Based on our inflation model, the macro environment is expected to remain a robust tailwind for crypto. Another decline in inflation is anticipated, prompting the Federal Reserve to likely initiate interest rate cuts,” Matrixport said in its report.
“Combined with geopolitical crosscurrents, this healthy dose of monetary support should push Bitcoin to new highs in 2024.”
Many commentators see easing monetary policy as supportive for bitcoin, which is viewed as a risky asset. Meanwhile, some see bitcoin as a sort of “safe haven” asset to pour money into in times of geopolitical strife, though many disagree with this theory.
Venture capital CoinFund has one of the highest price calls for bitcoin for 2024.
“Bitcoin has a strong inverse correlation with the dollar and real yields, and both are now going down,” Seth Ginns, managing partner at CoinFund, told CNBC via email. “We also expect the follow through inflows post-launch of the BTC spot ETF, as well as growing excitement around the likely approval of ETH (ether) spot ETFs later in 2024, will be quite meaningful.”
Ginns added that he thinks the industry is in the process of “regulatory normalization.”
Ginns said that bitcoin could touch $1 million per coin “in this next cycle,” but said a more “reasonable expectation” for 2024 would see bitcoin between $250,000 and $500,000.
The traditional portfolio of stocks and bonds has been on a tear over the past two months as the S&P 500 nears a record high, but it’s the big gains in fixed income that stand out, according to Bespoke Investment Group.
Fixed-income assets are typically the “insurance” part of the classic 60-40 portfolio, usually holding up during market weakness even if that wasn’t the case in 2022, Bespoke said in a note emailed Thursday. Both stocks and bonds in the U.S. have rallied during the fourth quarter and are up so far in 2023.
“With just two trading days left in the year, the market is on the verge of history,” Bespoke said. “After being written off for dead in the last year, the traditional 60/40 portfolio of 60% stocks and 40% bonds is within a whisker of its best two-month rally since at least 1990.”
In 2022, bonds failed to provide a cushion in the 60-40 portfolio as the Federal Reserve aggressively raised interest rates to battle surging inflation. Stocks and bonds tanked last year, with the S&P 500 SPX
seeing its ugliest annual performance since 2008, when the global financial crisis was wreaking havoc in markets.
Over the past two months, the classic 60-40 mix has seen a gain of 12.16% based on the total returns of the S&P 500 and Bloomberg Aggregate Bond Index, according to Bespoke. The current rolling two-month performance is stronger than gains seen in the two-month rally after the onset of the Covid-19 pandemic through May 2020, the firm found.
BESPOKE INVESTMENT GROUP NOTE EMAILED DEC. 28, 2023
“The only other period that was better for the strategy was the two months ending in April 2009,” the firm said. “Back then, the strategy rallied 12.25%, so if the next two trading days even see marginal gains, the current rally will set the record.”
Bonds surge
The Vanguard Total Bond Market ETF BND
and iShares Core U.S. Aggregate Bond ETF AGG
have each seen a total return of slightly more than 7% this quarter through Wednesday, according to FactSet data.
That puts the Vanguard Total Bond Market ETF on track for its best quarterly performance on record, while the iShares Core U.S. Aggregate Bond ETF is heading for its biggest total return since 2008, FactSet data show. The iShares Core U.S. Aggregate Bond ETF gained a total 7.4% in the fourth quarter of 2008.
In April 2009, “the bond leg” of the 60-40 portfolio was up just 1.87% on a rolling two-month basis, while in May 2020 it gained 2.25%, the Bespoke note shows.
“During this current period, bonds have rallied an unprecedented 8.87%, which far exceeds any other two-month period since at least 1990,” the firm said. “While they still underperformed stocks in the last two months, they have never acted as a smaller drag on the strategy during a period of strength.”
Bespoke found that the S&P 500, a gauge of U.S. large-cap stocks, is up 14.35% over the last two months on a total-return basis, “which is certainly strong relative to history but not anywhere close to a record.”
The U.S. stock market was trading slightly higher on Thursday afternoon, with the S&P 500 up 0.2% at around 4,791, according to FactSet data, at last check. That’s within striking distance of the index’s closing peak of 4,796.56, reached Jan. 3, 2022, according to Dow Jones Market Data.
As stocks were inching higher Thursday afternoon, shares of both the Vanguard Total Bond Market ETF and iShares Core U.S. Aggregate Bond ETF were trading down modestly, according to FactSet data, at last check.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y
was rising about seven basis points on Thursday afternoon, at around 3.85%, but is down so far this quarter, FactSet data show. Bond yields and prices move in opposite directions.
Bond prices are rallying as many investors anticipate the Fed is done hiking rates — and may begin cutting them sometime next year — as inflation has fallen significantly from its 2022 peak.
As for year-to-date gains, the S&P 500 has surged 26.6% on a total-return basis through Wednesday, while the iShares Core U.S. Aggregate Bond ETF has gained a total 6.1% over the same period, FactSet data show.
It remains to be seen how popular such an ETF would be with retail investors, but more than 10 asset managers, including the world’s largest, BlackRock, are working to get their version of a spot bitcoin ETF approved. Industry participants predict that after these offerings become available, it won’t just be high-risk traders, but also retirement savers who will have more access to crypto as an asset class, either through their company 401(k) plan or through solo 401(k)s, if applicable, and self-directed IRAs.
“It’s a big step toward mainstream adoption of bitcoin and cryptocurrency. [Investors] will have more options available,” said Chris Kline, chief revenue officer of Bitcoin IRA, which allows retirement savers to invest in more than 60 cryptocurrencies within retirement accounts.
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Right now, interest in bitcoin is high. The cryptocurrency is up over 150% this year after a dismal 2022, and the spot bitcoin ETF race has helped push its value higher. But it remains an extremely volatile asset class with as many enemies as true believers.
Many major pension funds have earmarked dollars to crypto as an asset class in recent years. According to the 2022 CFA Institute Investor Trust Study, 94% of state and local pension plans had some crypto exposure. Fidelity Investments, the largest 401(k) plan administrator in the U.S., first added a bitcoin fund option in the fall of 2022 to allow employees who are comfortable with the risks and volatility of cryptocurrency to invest in bitcoin within their company-sponsored 401(k) plan.
Here’s what retirement savers who do see long-term potential in cryptocurrency as an asset class need to know about the potential use cases for spot bitcoin ETFs.
Many employers have been hesitant to offer crypto in a 401(k) based on 2022 guidance from the U.S. Department of Labor, according to industry experts.
With options to own crypto within retirement accounts such as 401(k)s and IRAs being limited, most people who own crypto today do so outside of retirement accounts. Many take a self-custody approach or use an exchange such as Coinbase or Gemini. Options are also available in nonretirement accounts at Fidelity and Betterment, for example.
Accordingly, retirement savers seeking to hold crypto assets in a retirement account typically need to find a self-directed provider that allows crypto investments, and that list is also limited. Once spot bitcoin ETFs are approved, however, expect more providers to allow them, and more options for retirement savers to invest in this fashion, say industry experts.
Assuming the SEC gives an affirmative nod to spot bitcoin ETFs, as expected, more companies might decide to offer it within their 401(k) lineup, said Steven T. Larsen, a certified financial planner and founder of Columbia Advisory Partners in Spokane, Washington.
The question is how many.
The Department of Labor doesn’t prohibit crypto in company retirement plans, but in its March 2022 guidance, “it put a pretty heavy thumb on the scale for plan sponsors considering it,” said Joshua Rubin, vice president of legal at Betterment.
“At this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies,” the Department of Labor wrote in a compliance assistance release.
A spot bitcoin ETF may solve some of the hesitancies the DOL outlined, including concerns related to custody and recordkeeping and valuation, Rubin said. Still, employers may be hesitant to jump on board, at least initially, some industry watchers said.
“Employers will be very reticent about being the first ones out there to allow this,” said Tim Picciott, a CFP with Lexington, Massachusetts-based Innovative Advisory Group. “I don’t see most HR departments and plan trustees just signing on. I think it’s going to have to be a move from the workers” asking for it, he said.
While market-leading custodians such as Schwab and Fidelity don’t allow investors to invest directly in cryptocurrencies within individual retirement accounts, they have become more involved in the crypto market on multiple fronts, from venture investments both financial services giants made in a crypto trading infrastructure company to a thematic crypto fund launched by Schwab.
But to invest directly, retirement investors need to work with other providers such as Bitcoin IRA, BitIRA and iTrustCapital.
However, market watchers predict more mainstream custodians will offer spot bitcoin ETFs once they become available. “It will be everywhere once these come out,” said Larsen, who is also the founder of Defi Steward, which helps investment advisors manage digital assets for clients. “This is great for people who want exposure to bitcoin as an asset class,” he said.
There are a lot of factors that go into whether bitcoin has a place in your retirement portfolio. First and foremost, bitcoin is extremely volatile and many investors don’t have the risk appetite to invest even a portion of their retirement dollars in this emerging asset class. Investors also need to consider whether they want to hold bitcoin directly in a self-directed IRA, or solo 401(k), if applicable, or invest in bitcoin through an ETF.
With a spot bitcoin ETF, having a professional manager who is going to be diversifying access to crypto could lessen — though not eliminate — risk, said Mark Parthemer, chief wealth strategist at Glenmede, a wealth management firm.
On the other hand, there can be advantages to owning bitcoin directly through a self-directed IRA, Kline said. For instance, when it comes time to take your withdrawals after age 59½, you may be able to receive your distribution as the crypto asset itself, instead of taking the cash. When you sell the spot bitcoin ETF, the redemption would likely be for cash, he said. It’s an approach the SEC regards as safer.
In either case, there can be tax advantages for long-term investors who invest in crypto through a retirement account versus a brokerage account, Parthemer said. Assuming the investment increases dramatically, a retirement account allows investors to avoid the tax at the time of sale. If it’s in a Roth IRA and you meet the holdings requirements, the withdrawals aren’t subject to tax. By contrast, if you held it in a regular brokerage account and sold it, you could be subject to capital gains taxes at the time of sale, Parthemer said.
If your employer won’t offer a spot bitcoin ETF in its 401(k) plan, you could always ask your employer to reconsider. If the answer is no, you can still open an IRA with a provider that makes spot bitcoin ETFs available.
The new spot bitcoin ETFs will be eligible for use in all types of IRA accounts — deductible, nondeductible, Roth and SEP, as well as solo 401(k) plans, said Ric Edelman, founder of Edelman Financial Services, in an email.
“Given the outsized returns that many people expect these ETFs to produce over time, buying them inside an IRA account is going to be a common recommendation by financial advisors,” said Edelman, who wrote the 2022 book, “The Truth About Crypto” to educate advisors on the asset class and has described it as a once-in-a-generation wealth opportunity.
There are applications for an Ether ETF, but that’s likely to be approved by the SEC at a later point, Larsen said. “The spot bitcoin ETF will be the test case.”
Single-stock ETFs were first introduced in Europe in 2018. There are now nearly four dozen single-stock ETFs in the U.S., many of which track the so-called “Magnificent Seven” stocks — Apple, Microsoft, Alphabet, Nvidia, Amazon, Tesla and Meta. Other names on Morningstar’s list of single-stock ETFs include Coinbase and Alibaba.
Collectively, single-stock ETFs have about $3.3 billion of net assets, according to Morningstar.
The growth of these single-stock ETFs, which are leveraged, is not particularly surprising, given that the Nasdaq is up more than 40% this year and big-tech stocks in particular are soaring. But they’ve likely earned a long-term spot in the market.
Single-stock ETFs “are here to stay,” said Bryan Armour, director of passive strategies research for North America at Morningstar. The strategy “taps into some of the gambling mindset that exists in markets,” he said.
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Here’s what investors need to know about the growth of the single-stock ETF market and where it could be heading.
There are 45 single-stock ETFs in total, according to Morningstar, from a handful of providers including Direxion, AXS, GraniteShares and YieldMax. These ETFs follow bull, bear or option income strategies.
The largest by asset size is the Direxion Daily TSLA Bull 1.5X Shares, which tracks Tesla. In July, it became the first of its kind in the U.S. to surpass the $1 billion asset mark.
The second-largest single-stock ETF by asset size is the YieldMax TSLA Option Income Strategy ETF, which had around $841 million of assets at the end of November, according to Morningstar.
In third place by asset size is the GraniteShares 1.5x Long NVDA Daily ETF, which tracks Nvidia and has soared in a year dominated by artificial intelligence optimism and the gains for chipmakers. It had about $245 million in assets at the end of November, Morningstar data shows.
To achieve their stated returns, leveraged and inverse ETPs often use a range of investment strategies. This can include swaps, futures and other derivatives as well as long or short positions, according to a FINRA explainer.
Rich Lee, head of program and ETF trading at Robert W. Baird & Co., expects to see more single-stock ETFs with an options overlay strategy and income component. YieldMax offers several of these ETFs that seek to generate monthly income by selling/writing call options on single company stock exposures.
There is continuous appetite for single-stock ETFs, and there will continue to be innovation, combining themes and exposures under the ETF wrapper, Lee said. “It’s a way to get quick exposure with leverage.”
While the number and assets within these ETFs has mushroomed, there have been duds. Single-stock ETFs tracking Nike and Pfizer — the former whose shares are close to flat this year and the latter whose shares are down 45% — among a few others, closed down. Some stocks are too bland to get investors riled up one way or another, Armour said. If an ETF can’t get enough traction, investment managers have to decide where to focus their resources, he said. It’s something for investors to keep in mind: What’s on the market today may not be in a few months.
Performance is all over the map. The Direxion Daily TSLA Bull 1.5X, for instance, had a total one-year return of about 12% through November, but it’s up about 148% year to date through Dec. 15, according to Morningstar. The GraniteShares 1.5x Long COIN Daily ETF, which tracks Coinbase, had a one-year return through November of about 206% and returned about 488% year to date through Dec. 15, according to Morningstar.
Not surprisingly, single-stock ETFs that take a bear strategy have seen negative returns of late.
But performance over time isn’t really the point.
The market for these vehicles is mostly traders and individual investors with an extremely high risk tolerance. There are other ways to gain leverage, without needing to pay fees in the 1% range, but for some more sophisticated retail investors who don’t have experience with leverage, a single-stock ETF can be a safer option, Armour said. “It’s just not a smart long-term strategy. It’s a very costly way to gamble in the stock market.”
These vehicles are appropriate for sophisticated retail investors and professionals that are willing to take a short-term view and are willing to monitor their positions daily, said Ed Egilinsky, head of sales and distribution and alternatives at Direxion.
“These are not buy-and-hold products,” he said. “If someone is looking to buy something and not pay attention to it, this is not the vehicle.”
The U.S. Securities and Exchange Commission issued an investor warning in August, reiterating the extra risks inherent to single-stock ETFs. “Because leveraged single-stock ETFs in particular amplify the effect of price movements of the underlying individual stocks, investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself,” the SEC said.
“You definitely have to understand what investing or hedging investment you’re trying to achieve with these products,” Lee said. “For a lot of these leveraged products, people are using it to get intraday exposure or use it for some sort of hedging.”
Which stocks could be targeted for the next hotly traded single-stock ETF?
Success is determined in part by assets, daily volume and scale, said Egilinsky. While he declined to be specific about where Direxion is next looking to add to its single-stock ETF lineup, he did say AI is a hot area. “We’re going to let this play out over time. It’s still in its infancy stages and we’ll continue to look for single stocks that make sense for us to bring to the market.”
Yields on 3-month BX:TMUBMUSD03M
and 6-month BX:TMUBMUSD06M
Treasury bills have been seeing yields north of 5% since March when Silicon Valley Bank’s collapse ignited fears of a broader instability in the U.S. banking sector from rapid-fire Fed rate hikes.
Six months later, the Fed, in its final meeting of the year, opted to keep its policy rate unchanged at 5.25% to 5.5%, a 22-year high, but Powell also finally signaled that enough was likely enough, and that a policy pivot to interest rate cuts was likely next year.
Importantly, the central bank chair also said he doesn’t want to make the mistake of keeping borrowing costs too high for too long. Powell’s comments helped lift the Dow Jones Industrial Average DJIA
above 37,000 for the first time ever on Wednesday, while the blue-chip index on Friday scored a third record close in a row.
“People were really shocked by Powell’s comments,” said Robert Tipp, chief investment strategist, at PGIM Fixed Income. Rather than dampen rate-cut exuberance building in markets, Powell instead opened the door to rate cuts by midyear, he said.
“Eventually, you end up with a lower fed-funds rate,” Tipp said in an interview. The risk is that cuts come suddenly, and can erase 5% yields on T-bills, money-market funds and other “cash-like” investments in the blink of an eye.
Swift pace of Fed cuts
When the Fed cut rates in the past 30 years it has been swift about it, often bringing them down quickly.
Fed rate-cutting cycles since the ’90s trace the sharp pullback also seen in 3-month T-bill rates, as shown below. They fell to about 1% from 6.5% after the early 2000 dot-com stock bust. They also dropped to almost zero from 5% in the teeth of the global financial crisis in 2008, and raced back down to a bottom during the COVID crisis in 2020.
Rates on 3-month Treasury bills dropped suddenly in past Fed rate-cutting cycles
FRED data
“I don’t think we are moving, in any way, back to a zero interest-rate world,” said Tim Horan, chief investment officer fixed income at Chilton Trust. “We are going to still be in a world where real interest rates matter.”
Burt Horan also said the market has reacted to Powell’s pivot signal by “partying on,” pointing to stocks that were back to record territory and benchmark 10-year Treasury yield’s BX:TMUBMUSD10Y
that has dropped from a 5% peak in October to 3.927% Friday, the lowest yield in about five months.
“The question now, in my mind,” Horan said, is how does the Fed orchestrate a pivot to rate cuts if financial conditions continue to loosen meanwhile.
“When they begin, the are going to continue with rate cuts,” said Horan, a former Fed staffer. With that, he expects the Fed to remain very cautious before pulling the trigger on the first cut of the cycle.
“What we are witnessing,” he said, “is a repositioning for that.”
Pivoting on the pivot
The most recent data for money-market funds shows a shift, even if temporary, out of “cash-like” assets.
The rush into money-market funds, which continued to attract record levels of assets this year after the failure of Silicon Valley Bank, fell in the past week by about $11.6 billion to roughly $5.9 trillion through Dec. 13, according to the Investment Company Institute.
Investors also pulled about $2.6 billion out of short and intermediate government and Treasury fixed income exchange-traded funds in the past week, according to the latest LSEG Lipper data.
Tipp at PGIM Fixed Income said he expects to see another “ping pong” year in long-term yields, akin to the volatility of 2023, with the 10-year yield likely to hinge on economic data, and what it means for the Fed as it works on the last leg of getting inflation down to its 2% annual target.
“The big driver in bonds is going to be the yield,” Tipp said. “If you are extending duration in bonds, you have a lot more assurance of earning an income stream over people who stay in cash.”
Molly McGown, U.S. rates strategist at TD Securities, said that economic data will continue to be a driving force in signaling if the Fed’s first rate cut of this cycle happens sooner or later.
With that backdrop, she expects next Friday’s reading of the personal-consumption expenditures price index, or PCE, for November to be a focus for markets, especially with Wall Street likely to be more sparsely staffed in the final week before the Christmas holiday.
The PCE is the Fed’s preferred inflation gauge, and it eased to a 3% annual rate in October from 3.4% a month before, but still sits above the Fed’s 2% annual target.
“Our view is that the Fed will hold rates at these levels in first half of 2024, before starting cutting rates in second half and 2025,” said Sid Vaidya, U.S. Wealth Chief Investment Strategist at TD Wealth.
U.S. housing data due on Monday, Tuesday and Wednesday of next week also will be a focus for investors, particularly with 30-year fixed mortgage rate falling below 7% for the first time since August.
The major U.S. stock indexes logged a seventh straight week of gains. The Dow advanced 2.9% for the week, while the S&P 500 SPX
gained 2.5%, ending 1.6% away from its Jan. 3, 2022 record close, according to Dow Jones Market Data.
The Nasdaq Composite Index COMP
advanced 2.9% for the week and the small-cap Russell 2000 index RUT
outperformed, gaining 5.6% for the week.
