Among the financial titans cleared to sell “exchange traded funds” that invest directly in bitcoin are Boston’s Fidelity Investments, along with other heavies such as BlackRock and VanEck. On Fidelity’s investment platform, one of the largest in the world, you can nowbuy these ETFs right alongside regular stocks and bonds.
Franklin Templeton, another investment giant, on Thursday posted a picture of its Ben Franklin avatar featuring the ‘laser eyes’ meme, usually used by crypto superfans on social media to embellish their profile pictures with a tongue-in-cheek, futuristic vibe.
“It’s a very big deal but possibly not for some of the reasons people have been excited on X, and all the memes and jokes of the last few hours,” said Christian Catalini, founder of the MIT Cryptoeconomics Lab. “It’s a very important step toward bitcoin establishing itself as an important, new asset class that traditional finance institutions can directly engage with.”
(Catalini is also cofounder of the bitcoin payments company Lightspark.)
If you have not been paying attention to crypto following the market crushing implosion of the FTX exchange fourteen months ago, this might surprise you: Despite mounting regulatory and economic setbacks, crypto was a top market performer in 2023.
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Bitcoin, the largest and most valuable cryptocurrency, surged 154 percent last year. Meanwhile, the Standard & Poor’s 500 index gained 24 percent, and Nasdaq rose some 44 percent.
All this was happening as one-time FTX chief executive Sam Bankman-Fried went on trial — and was convicted — for the fraud associated with his firm’s collapse.
Sam Bankman-Fried, cofounder of FTX Cryptocurrency Derivatives Exchange, departed from court in New York on Jan. 3, 2023. Stephanie Keith/Bloomberg
“It’s been a wild ride to see the belief system of this industry come to fruition,” said Dave Balter, chief executive at FlipSide Crypto,a Cambridge firm that specializes in crypto data analysis. “The ‘big deal’ on a personal level’s a spiritual one, where disbelievers and contrarians now recognize why our conviction has never wavered.”
But even as some big names have come along to the crypto world, there are some high-profile holdouts — and they’re airing some of the same critiques that have faced crypto for years. Namely, bitcoin and other cryptocurrencies have always been among the riskiest, most volatile investments — prone to wild swings in value that are difficult to predict.
Vanguard, the bastion of plain-vanilla index funds, said it was not planning to offer bitcoin ETFs through its brokerage even as its competitors rushed to do so.
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“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” the company said in a statement to The Wall Street Journal.
And lest anyone think crypto had lost its ability to unpleasantly surprise investors, the market took another big hit just days after the ETF approval many boosters had been eagerly awaiting. By Sunday, bitcoin had seen its price drop by upward of 10 percent from its midweek high as investors sought to take profits following the recent runup.
It was just the first week of growing pains in the relationship between bitcoin and the big-time traditional investment firms.
“It’s like communing with the enemy,” said Ryan Shea, a London-based crypto economist at the financial technology firm Trakx. “But for moms and pops to get comfortable in this world, to gain legitimacy, it’s important to get to the next level.”
The Bitcoin logo appears on the display screen of a cryptocurrency ATM in Salem, N.H. on Feb. 9, 2021.Charles Krupa/Associated Press
Traditionally, buying bitcoin or other cryptocurrencies has looked a lot different than trading more familiar investments. Investors often must create accounts with crypto exchanges such as Coinbase (though a handful of stock brokerages offer some crypto services). And for those who want maximum control of their assets’ security, there are a handful of independent “crypto wallets” to use for storage.
Compare that process to the relative ease of investing in one of these new bitcoin ETFs, which you can buy and sell in the same way you’d trade shares in Microsoft or Nvidia. While ETFs for stock and other investments have long been available to brokerage customers, this is the first time one of these funds can actually hold bitcoin.
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Already, the 11 funds approved by the SEC are battling it out over the new money in the market, and that could mean lower costs for consumers in the short term. They are competing on fees, which tend to be below 0.5 percent of assets, and some, such as ARK Investment Management, have temporarily waived fees altogether.
Bitcoin-linked products that were on the market before, including derivatives-based funds and trusts, charge as much as 2 to 3 percent.
“It’s a land grab,” said Paul Karger, cohead of Boston’s Twin Focus, a wealth adviser. “A handful of big winners will own most of the Main Street in-flows.”
Given the lower fees, these new funds may hew tothe price action of bitcoin more closely. That is something their predecessors, which were largely based on futures contracts and have been around for two years and change, have not done. This discrepancy, called ‘tracking error’ in trade lingo, occurs when an ETF’s value diverges from its underlying assets.
Matthew Walsh, of Boston blockchain investor Castle Island Ventures, said that bitcoin futures ETFs have a “tracking error,” that can reach 5 to 10 percent, while he predicts the spot ETFs will have a one-to-one correlation to the underlying price of bitcoin. “It’s a huge win for the retail investor,” Walsh said.
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Eric Biegeleisen, partner and deputy investment chief at ETF investor 3Edge, said with this move, bitcoin is a step closer to becoming a “legitimate” asset. While he likes having 11 funds to choose from, now comes the work to figure out which one he likes best. “Certainly, there are concerns right out of the gate,” he added. Chief among them are fraud and asset security.
It is going to take a huge amount of education to get investors comfortable, said Ophelia Snyder, cofounder and president of 21Shares, a financial firm that worked with ARK to create one of the new bitcoin ETFs. But the early signals show there’s a lot of potential.
“Crypto’s never seen money like this. A billion dollars is a lot of money in one day, but we saw that within the first two hours. This isn’t the same ballgame anymore.”
The Nasdaq board in Times Square displays a message as Bitcoin Spot ETF’s are launched on the Nasdaq Exchange on Jan. 11 in New York City. Stephanie Keith/Getty
Suchita Nayar can be reached at suchita.nayar@globe.com.
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Last year, Paramount said it would use $24 billion in funding from Saudi Arabia, Abu Dhabi, and Qatar to help buy WBD.
Now that Paramount has won that deal, it won’t say whether that’s still the plan.
A key Paramount backer suggests that Gulf money would be a good thing for this deal.
We still don’t know if Paramount intends to use billions of dollars from Gulf states like Saudi Arabia to help it buy Warner Bros. Discovery.
But if Paramount does end up doing that, it wouldn’t be a bad thing, says a key Paramount backer.
That update comes via Gerry Cardinale, who heads up RedBird Capital Partners, the private equity company that helped finance Larry and David Ellison’s acquisition of Paramount last year and is doing the same with their WBD deal now.
In a podcast with Puck’s Matt Belloni published Wednesday night, Cardinale wouldn’t comment directly on Paramount’s previously disclosed plans to use $24 billion from sovereign wealth funds controlled by Saudi Arabia, Abu Dhabi, and Qatar to help buy WBD.
Instead, he reiterated Paramount’s current messaging on the deal’s financing: The $47 billion in equity Paramount will use to buy WBD will be “backstopped” by the Ellison family and RedBird — meaning they are ultimately on the hook to pay up. The rest of the $81 billion deal will be financed with debt.
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Cardinale also acknowledged what Paramount has disclosed in its current disclosure documents: It intends to sell portions of that $47 billion commitment to other investors: “We haven’t syndicated anything at this time,” he said. “We do expect to syndicate with strategic, domestic, and foreign investors. But at the end of the day, that alchemy shouldn’t matter because it’ll be done in the right way.”
And when asked about concerns about Middle Eastern countries owning part of a media conglomerate that includes assets like CNN, Cardinale suggested that could be a plus.
“I think we want to be a global company,” he said. “You look at what’s going on right now geopolitically. What’s going on right now geopolitically out of the Middle East wouldn’t be, the positives of that would not be happening without some of those sovereigns that you’re referring to.”
He continued:
“The world is changing. We can stick our head in the sand and pretend it’s not, or we can embrace globalization and the derivative benefits both geopolitically and otherwise that come from that. Content generation coming out of Hollywood is one of America’s greatest exports.I firmly embrace the global nature and orientation that we bring to this from a capital standpoint, from a footprint standpoint, etc. At the end of the day, I do understand some of the concerns that you’ve raised, but that will work itself out between signing and closing because at the end of the day, worst-case scenario, Ellison and RedBird are 100% of this thing.”
All of which suggests to me that Paramount still intends to use money from Gulf-based sovereign wealth funds to buy WBD.
What I don’t understand is why the company won’t say that out loud. Does that mean it’s still negotiating with potential investors? Or that it’s reticent to disclose outside investors, for whatever reason, until it has to? A Paramount rep declined to comment.
Talks on landmark crypto legislation have hit a new impasse after banks said they could not back a compromise pushed by the White House, a development that cast doubt on whether the bill will pass this year and sparked criticism from President Donald Trump who accused lenders of trying to undermine it.
A tenacious team of finance majors, who sacrificed most of their winter break to prepare for the CFA Institute Research Challenge, took first place in that regional competition last week.
Students Hunter Baillargeon, Dylan Fischetto, Richard Opper, Philip Ochocinski and Rushit Chauhan were tasked with researching and analyzing a major utility company, and then producing a 10-page report about whether to buy, hold, or sell its stock. They chose to sell.
One of the CFA judges said both the team’s report and presentation were among the best he had seen in many years.
“As a team, we were thrilled our hard work paid off and our many hours of work allowed us to achieve what we did,’’ Baillargeon said. “What we accomplished couldn’t have been done without working with such a cohesive and collective unit.’’
“From a technical perspective, I realize how valuable true analysis is and the importance of looking where others don’t for a differentiated approach,’’ Baillargeon said.
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The first round of competition featured 24 college teams from the Stamford-Hartford-Providence region. The Stamford team, composed of seniors all of whom all participate in UConn’s Student Managed Fund program, received its first-place award Feb. 26 in a ceremony in Hartford. The team will advance to the East Coast competition later this month.
Stamford Finance Program is Robust
“The Stamford team’s advancement in this competition reflects not only the students’ exceptional talent and work ethic, but also the rigor and applied focus of the UConn finance curriculum,’’ said professor Yiming Qian, head of the Finance Department.
“Our Stamford campus hosts approximately 200 financial management majors. The Stamford program is a vital part of the School and continues to demonstrate outstanding strength,” she said.
Professors Steve Wilson and Jeff Bianchi, who combined have 75 years of experience in the investment industry, were the team’s advisers and were supported by academic director Katherine Pancak.
Wilson said the task of analyzing a utility is particularly complex because of the company’s structure and the regulatory environment in which it operates.
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“I believe the Stamford team stood out because of the depth of their research, and willingness to take a bold stand, including the decision to ‘go out on a limb’ and recommend selling the stock,’’ he said. “They didn’t ‘play it safe.’’’
“This clean-sweep was a true team effort. They were tireless throughout, and sleepless too often, but they never wavered from their desire to always dig deeper and uncover any information that would strengthen our investment case,’’ he said. “What a phenomenal job they did!’’
Competition in Hong Kong Is Ultimate Goal
The Stamford team will compete against Loyola, Canisius, Sacred Heart; Seton Hall, Villanova, St. Michaels, Western New England, University of Maine, Fordham and Penn State next. In total, some 8,000 students are expected to participate in various competitions worldwide, culminating in a championship round in Hong Kong in May.
Wilson said the financial industry is always welcoming of new talent. And when one of the judges told him that the Stamford team produced some of the best work that he’d seen in years, Wilson felt tremendous pride for the students.
“Finance is an open playing field. In investments, the best idea wins,’’ he said.
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Baillargeon said he will always appreciate the whole team’s dedication.
“What I’ll remember most is the help of our advisers and our cohesive, close-knit team where everyone pulled their weight,’’ Baillargeon said. “We put in long hours, did a tremendous amount of research, and collaborated well together. I hope when I enter the workforce I get to work with a team as committed as this one is.’’
