Trading in the approved spot bitcoin ETFs (BTC-USD) has already reached billions of dollars. While the cryptocurrency has been around for over 10 years, it seems there is a renewed interest around the digital asset now that the ETFs are available. Matt Hougan, Bitwise Asset Management CIO, joins Yahoo Finance to give insight into why retail investors should add these ETFs to their portfolios and how the Bitwise Bitcoin ETF (BITB) stacks up against rivals.
Hougan explains why the spot bitcoin ETFs are so important: "The real market that it unlocks is the financial advisers and institutions. Financial advisers and institutions can't invest using apps, and that's 80% of the wealth in America. So when you think about crypto going from zero to over a trillion dollars, that's been built largely on retail self-directed investors who are very important, but they're a minority of the market. Professional investors need professional products like ETFs to access that market and that era just started today."
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Watch the video above to learn why Bitwise thinks it has the best spot bitcoin ETF.
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
JULIE HYMAN: The top story for markets day has really been the first day of trading for the spot Bitcoin ETFs. The fund seeing mixed moves on the day. Bitwise, which by the way offers the lowest management fees out of all of the 11 ETFs, ended the day to the downside, again, versus where it began trading on the day.
And Bitwise Asset Management CIO Matt Hougan is joining us now. Matt, it is great to see you. Congrats, as I've been saying to all you guys because I know it has been a long road to get these products approved. So we were just talking about some of the questions around these products. And I'll start with the first one, which is, how do you distinguish yourself? Is it just that like you guys want to be known as the cheapest one out of the gate and get a lot of assets in hand that way?
MATT HOUGAN: Yeah. Thanks for having me. Glad to be here on this historic day. We're really proud that BITB is the lowest cost ETF. We're waiving the fees for the first six months. And then it's just 20 basis points per year after that. That's an extraordinarily low fee. But it's paired with a huge amount of crypto expertise. Bitwise is the largest crypto index fund manager in the world. We've been in this market for seven years serving financial advisors.
So the two things I think investors will look for are, what is the lowest fee product? Because the less you pay, the more you get in finance. And then who has the support systems to provide research and answers and data to execute trades well? Who knows how this market works? The combination of crypto expertise and low cost we think is a winner for BITB.
JOSH LIPTON: And Matt, there are a fair amount of these new products out there right now. It's a lot of competition. I'm interested to hear as you look ahead, do you expect to see some consolidation in this space?
MATT HOUGAN: Yeah. First of all, we welcome all the people coming into this market for the first time. We welcome BlackRock entering the market. We've been here for seven years building. It's wonderful to see other people contribute to that story. I do suspect there'll be some level of consolidation, but I think you have multiple winners in this space.
You look, there were five ETFs, BITB was one of them, traded over $100 million today. That's an extraordinary debut for a new ETF. My guess is it's in the top 1% of all ETFs to get that kind of volume on day one. This is a big asset class. I think these ETFs are going to attract tens of billions of dollars over time. So I think there will be multiple winners. Do we need 11 or 12? No. But I think we'll have multiple winners, good choices, and low costs.
JULIE HYMAN: You know, Matt, something I've been trying to figure out through this whole process, and maybe this is a silly question, is like, don't all the people who wanted Bitcoin already have it, right? Yes, there were some barriers to buying it, but it wasn't that hard, right? There are multiple trading platforms where you can go on and buy the asset. So why is this seen as such an unlocking of demand?
MATT HOUGAN: Yeah, it's a great question, not necessarily question at all. I think for retail investors, ETFs provide a lot of peace of mind. You don't need to buy it on your phone that you carry around in your wallet and remember passwords. You can buy it in the same way you buy SPY or Apple stock in your Fidelity or Robinhood account, so peace of mind for them.
But the real market that it unlocks is financial advisors and institutions. Financial advisors and institutions can't invest using apps. And that's 80% of the wealth in America. So when you think about crypto growing from zero to over a trillion dollars, that's been built largely on retail self-directed investors who are very important, but they're a minority of the market. Professional investors need professional products like ETFs to access that market. And that era just started today.
JOSH LIPTON: And Matt, I want to get your take on something I saw today. Mohamed El-Erian, the economist posted on X, Matt. And he was talking about the big day. And he said, listen, this is a really big, important day for Bitcoin as an investment. As an investment. But not as a potential global currency. He said the outlook there, in his opinion, is still much more constrained. Do you agree with that, Matt?
MATT HOUGAN: I love Mohamed El-Erian, an incredible thinker. I'm going to disagree there. If you think about what Bitcoin is trying to do, it's trying to create a parallel settlement rail, a parallel currency that can exist alongside and challenge the fiat system. It has to be much bigger than it is today. Getting an ETF launch widens the number of people who can access it. It brings people into the market. It strengthens it from a regulatory perspective.
Does it solve all the problems? Of course not. But was this an important milestone on the place, on the path to where Bitcoin is going? Of course, it was. And so this doesn't get us all the way there, but it is a really important moment. There's a before ETF era and an after ETF era. And an after ETF era as Bitcoin is where we are now.
JULIE HYMAN: Matt, at the same time Bitcoin is a volatile asset, right? It's always been a volatile asset. I know a lot of people were talking about the halving that's happening later this year. Some of the research I've seen says that the price tends to surge and then plunge after we get one of these halving events, which happen with some regularity. So does an ETF change any of that, or are we still going to see Bitcoin as a super volatile asset?
MATT HOUGAN: Yeah. It's a very volatile asset because it's early in its journey, right? It's going after the largest addressable market in the world, which is money and finance. But it's early in its journey. So it's still volatile. Investors should know that. And that means you should size your portfolio appropriately. The average Bitwise client-- we serve tens of thousands of people-- has 1% to 5% of their portfolio in Bitcoin. That way, you can handle that volatility.
But I do think that this will slightly attenuate it over time. We're bringing new and different types of investors into the Bitcoin market. They'll have different reasons for buying, different holding periods. So it's going to bring that volatility in a little bit. But you should expect it to still be volatile on the upside and on the pullbacks.
JOSH LIPTON: Matt, thank you so much for joining the show today. I always appreciate your time and insight on all things crypto.