ByteTree launches bitcoin + gold ETF
ETF industry newcomer ByteTree Asset Management is listing an ETF that invests in both physical bitcoin and physical gold.
The 21Shares BytreTree BOLD ETP (BOLD) will track the Vinter ByteTree BOLD Index.
The 21Shares BytreTree BOLD ETP (BOLD) will track the Vinter ByteTree BOLD Index.
The index blends the performance of bitcoin and gold based inverse volatility. The less volatile asset gets the highest weight. And if the volatility of bitcoin or gold changes, so too does its weight in the index at monthly rebalance.
As gold is far less volatile than bitcoin, the index gives gold a much higher weighting. As it currently stands, the bitcoin weight is “likely to range between 10% to 30% at the time of rebalancing, with the gold weight ranging between 70% and 90%”, BytreTree says.
The weighting methodology is designed to make the product more acceptable to wealth managers, ByteTree says.
JP Morgan will handle custody for the gold bullion. While Coinbase will handle the bitcoin.
21Shares has been brought in as a white labeller.
The fund charges 1.49%.
Bernie’s commentary – why not just buy bitcoin and gold ETFs?
My first reaction when reading about this ETF was that it sounds like a nice idea as bitcoin and gold are both inflation hedges. But I wondered what the appeal of this ETF was when investors can just buy bitcoin and gold ETFs. Doing so would be lower fee (gold ETFs these days are basically free). And doing so would also give you the freedom to decide how much of each you wanted. I also wondered why they had chosen volatility weighting rather than something like market cap.
So I spoke to ByteTree to get their answers. Their view is that having a volatility management framework is important for wealth managers. Bitcoin on its own is just too speculative and volatile for the wealth management industry – whose DNA is all conservative. But pared with gold – which is also an “alternative” and inflation hedge – it just might fly.
They added that the didn’t think that market cap weighting was appropriate for bitcoin. This is because there is no buyout value for bitcoin like there is for a company. (Bitcoin is only valuable if its distributed and not bought out. Whereas companies can be more valuable when you buy them out and take complete control).
As for why they bought both bitcoin and gold, they said it spares investors having to pick and choose. If the dispersion between bitcoin and gold is low, and you don’t want to be a market timer, you’re better off just buying both.
It’s an interesting idea.