Beyond Bitcoin: Investors Seek ETFs, Other Digital Alternatives

When it comes to digital assets, bitcoin just isn’t enough anymore for some investors.  

In what may be seen as the next phase of crypto investing, wealth management offices are moving beyond cryptocurrencies, broadening their expertise, and offerings, to other digital investments like nonfungible tokens, according to a recent report from Paris-based consultant Cap Gemini.  

The Top Trends in Wealth Management report, which seeks to predict what’s coming up in offices serving high net worth individuals, said clients want to learn more about digital assets. They want information on exchange-traded funds, NFTs, metaverse-related investments and other digital currencies. This is forcing wealth advisors into the role of digital asset expert, the report said. 

“HNWIs seeking to diversify their portfolios are turning to digital assets,” the report said, referring to high-net-worth individuals. “They want information on everything from cryptocurrencies to indirect crypto investment through exchange-traded funds, NFTs, metaverse-related products and digital currencies.” 

The push by investors is putting pressure on firms to grasp strategies for investing in digital assets as well as risk, tax ramifications and digital infrastructure, the report said. They must also be aware of “details about returns to balance client enthusiasm for digital assets while explaining associated risks.” 

While investors clamor for more expertise, the performance of digital-asset-focused ETFs has been uneven at best and marked by big outflows of investor money, according to ETF.com data. 

The biggest, and first, bitcoin ETF—the ProShares Bitcoin Strategy ETF (BITO)—has dropped 65% since its October 2021 launch. The fund, which invests in bitcoin futures, saw $19.4 million exit this month. Still, the ETF’s share price has surged 45% so far this year. 

Metaverse ETFs have also struggled. The Roundhill Ball Metaverse ETF (METV), which has stakes in Nvidia Corp., Roblox Corp., Meta Platforms Corp., among others, had $2 million in outflows this month. Its share price is also well below where it began trading, despite a 19% year-to-date gain. 

Contact Ron Day at  [email protected] or follow him on Twitter at @RonDayETF