The US investing industry stands on the precipice of a dramatic upheaval that could see bitcoin and other cryptocurrency assets replace gold in investor portfolios.
That’s according to Nate Geraci, president of the ETF Store, an independent investment advisor. He revealed in a Bloomberg TV interview that his millennial clients are clamoring to hold bitcoin in their portfolios – if only the SEC would let them.
CRYPTO IN A LANDSLIDE: ETF EXPERT SAYS MILLENNIALS PLAN TO KICK GOLD TO THE CURB
Responding to a question from Bloomberg analyst Eric Balchunas about whether he would ever invest client funds in a bitcoin ETF, Geraci stunned his fellow panel members when he said that millennial investors overwhelmingly desire to hold bitcoin instead of traditional hedge assets like gold.
How overwhelming? Ninety percent.
“When we talk to our younger clients – we have a core gold allocation in our portfolios, and they’ll ask about that and say, ‘What about crypto?’ And if you talk to, primarily millennials, and ask them which they prefer, bitcoin or gold, it’s a landslide. It’s not even close, it’s like 90% prefer bitcoin.”
Geraci’s bold claim was more anecdotal than scientific, but there’s plenty of hard data that demonstrates that younger investors are vastly more comfortable with holding cryptocurrency in their portfolios than investors who grew up in the pre-digital era.
In April, a Harris Poll survey found that 18 to 34-year-olds are “very” or “somewhat” likely to purchase bitcoin within the next five years. That might not seem overwhelming, but consider that only 37% of Americans in that demographic currently own stocks.
Similarly, a February eToro survey found that 43% of millennials trust crypto exchanges more than stock exchanges, even though crypto trading platform hacks dominate the mainstream news cycle.
ETF WOULD REDUCE CRYPTO INVESTING RISKS
Nate Geraci further pointed to the success of the $1.5 billion Bitcoin Investment Trust(OTC: GBTC) as proof that there is sufficient market demand for a crypto ETF.
He noted that the over-the-counter product regularly trades at a staggering premium to the underlying value of its BTC assets. That’s because GBTC shares fluctuate based on supply and demand, not just the price of bitcoin. An ETF, he said, would flatten that premium and thus reduce investor risk.
“It seems a bit incongruent to me that we have that product out there trading, where investors really could get hurt if they don’t understand that premium, but we don’t have a bitcoin ETF.”
“The demand is there,” he concluded.
SEC KICKS THE BITCOIN ETF CAN DOWN THE ROAD
Unfortunately for crypto bulls, millennials aren’t the ones manipulating the levers of the Securities and Exchange Commission (SEC), which holds unilateral authority to approve or deny bitcoin ETF applications.
The SEC, continues to punt on the issue. Last week, the regulatory agency extended its long trend of delaying ruling on cryptocurrency products when it postponed its decision on the VanEck/SolidX Bitcoin ETF to August 19. Most industry insiders expect the SEC to delay the VanEck/SolidX product again, pushing its final ruling until October 18.
Dave Nadig, the managing director of ETF.com, said that he believes the SEC is still in “information gathering mode” but that there is a “reasonable chance” regulators approve the first bitcoin ETF before the end of 2019.