A crash and the FTX scandal left the crypto’s reputation in tatters. Then ETFs gave it respectability.
7 min
Andrew Pratt doesn’t expect pushback when he pitches Bitcoin to his firm’s investment committee this week. Bitcoin’s 140% surge in the past year has all but erased memories of the crypto crash and scandals. And now that companies like BlackRock are backing Bitcoin funds, he sees no harm in adding 1% to some client portfolios.
“The downside, if it were to blow up, is just a percent,” says Pratt, investment manager at Wiser Wealth Management in Marietta, Ga. “But the upside benefits could be very large.”
Debating Bitcoin has come to feel futile. That the token has no underlying value or real-world uses increasingly seems beside the point. Buoyed by a flood of new crypto products and services, Bitcoin has scaled new heights, reaching $1.3 trillion in total market value and lifting the broader token market to $2.5 trillion.
Wall Street, after years of dismissing crypto, is now embracing it as a practical matter: There’s money to be made , fear of missing out, and fewer executives willing to call crypto an emperor with no clothes.
Many strategists argue that crypto remains a speculative trade without much underlying utility. Valuing it remains a black-art exercise of technical analysis, mixed with assumptions about supplies of tokens, demand from U.S. investors and overseas traders, and hopes that Bitcoin will endure as a “store of value” akin to gold . Making it all the more challenging are the opaque nature of crypto markets, thin liquidity and volumes, and valuation models that lack traditional analogues.
“To be a real asset, you have to generate cash flows,” says Barry Bannister, chief equity strategist at Stifel. “It’s also attempting to be a currency, but then it would have to be used for transactions. Until I see Bitcoin transacted in everyday life, it’s not a currency. It’s more of a speculative instrument.”
Yet on Wall Street, executives are now far more supportive. BlackRock CEO Larry Fink, a former critic, epitomises the about-face. BlackRock scored a win with its iShares Bitcoin Trust , part of a crop of such ETFs approved in January. BlackRock’s fund is now the second-largest Bitcoin ETF on the market with nearly $18 billion in assets. And it’s promoted by Fink, who talks up Bitcoin in public, saying that he’s “very bullish” on Bitcoin’s long-term prospects in a recent Fox Business interview.
BlackRock’s backing of a Bitcoin ETF helped convince advisors like Pratt to consider buying some crypto for clients. And Fink is a powerful voice as head of BlackRock, the world’s largest asset manager with more than $10 trillion under management.
“When Larry speaks, a lot of people listen,” said WisdomTree Head of Digital Assets Will Peck, whose firm also launched a Bitcoin ETF and is creating tokens of assets like Treasuries that customers could then trade in digital wallets.
Some Wall Street firms and asset managers, meanwhile, are putting out lofty price targets for Bitcoin. Bernstein Research in late March raised its year-end price target to $90,000—a gain of 30% from recent prices around $69,000. Ark Invest CEO Cathie Wood, an uber Bitcoin bull, has said she expects the coins to trade above $1 million by 2030.
Bitcoin needs a few things to keep going right to maintain its momentum. Its run-up coincided with rising expectations that the Federal Reserve will soon cut rates; without favourable macro conditions, Bitcoin could slump like other areas of tech.
The price has also risen in anticipation of April’s “halving,” an event that occurs roughly every four years when the amount of Bitcoin that miners receive for processing transactions on the network drops in half. The next halving will cut the reward to 3.125 tokens, reducing new issuance sharply. Bulls see more gains with the event, but J.P. Morgan analysts have said Bitcoin’s price could fall to $42,000 after the halving “euphoria” wears off.
Is Bitcoin really worth $42,000 or $1 million? No one can say, reflecting the fact that Bitcoin lives in a mystery zone of valuation and trading dynamics. The token frequently has massive swings on seemingly little news. Regulators have said that many trading platforms, especially those based abroad, are subject to manipulation and “wash trading,” in which traders exchange tokens with themselves to create artificial volume.
Given the risks, some financial advisors aren’t convinced there’s no harm in owning a touch of Bitcoin. When Pratt mentioned to a colleague at another firm that he was considering adding Bitcoin to client portfolios, the response was, “That’s pretty insane,” Pratt says.
But the fact that traditional firms are now backing crypto may lead more people to invest. “Folks are buying these products assuming they’re legitimate because a legitimate Wall Street actor offers them,” says Mark Hays, a senior policy analyst for the Americans for Financial Reform. “That’s not the case.”
Also worrying to consumer advocates is that investment firms may sell and trade Bitcoin without traditional investor safeguards. Investment banks, for instance, are required to separate their equity research arms from the banking side and must disclose banking relationships; the goal is to avoid conflicts of interest in research. Since Bitcoin isn’t considered a security, such laws potentially don’t apply to it, according to former SEC counsel Tyler Gellasch.
“It’s easy to see the potential for the types of abuses that have plagued the investment research business since its creation,” says Gellasch.
Wall Street has far bigger aspirations for crypto than ETFs. While the products now hold more than $55 billion in assets, they aren’t big fee generators. BlackRock until next January will only charge a 0.12% expense ratio on the first $5 billion in assets of the iShares Bitcoin Trust, with the remaining assets carrying a 0.25% fee. Even after the waiver expires, the fund will only charge a quarter percentage point. Other firms including Invesco , Franklin Resources , and WisdomTree are charging similar fees or less. For firms like BlackRock with $17.9 billion in 2023 revenue, the ETFs alone won’t move the needle.
The real prize for much of Wall Street will be convincing pension funds, sovereign-wealth funds, and insurance-company portfolios to own Bitcoin and open actively traded separately managed accounts for crypto, says Steven McClurg, head of U.S. asset management for CoinShares . McClurg was co-founder of Valkyrie Investments, whose ETF business was recently acquired by CoinShares and was among the nine firms that launched a Bitcoin ETF in January . Now, he says he is competing with major investment managers to win the business of pensions and insurance companies’ portfolios.
“For the last four years it’s been me begging them to listen to me and now people are begging me to talk to them,” says McClurg of executives in traditional finance.
The financial industry’s embrace of Bitcoin isn’t entirely a recent phenomenon. Fidelity Investments was early with CEO Abigail Johnson heavily involved in the company’s early research and experiments into Bitcoin, according to her recounting at industry conferences. In 2017, the company started letting employees pay with Bitcoin in the company cafeteria. The firm started a blockchain meetup and developed an internal list of dozens of potential crypto use cases. Fidelity also started offering Bitcoin custody services to institutions.
Now Fidelity is all-in on crypto, with ETFs, custody, and brokerage services. Its research division puts out reports that are generally favourable to crypto. Fidelity is also offering digital assets accounts to 401(k) plan sponsors. Fidelity declined to comment on how much its 401(k) products and crypto platform have grown so far.
Some executives early on found Johnson’s Bitcoin focus risky but didn’t feel comfortable challenging her, partly because her family controls the company, according to a former Fidelity executive. Johnson herself said in 2022 that her early push into crypto “was very controversial in the organisation,” adding “a lot of people are still very confused, and you kind of can’t blame them.”
Yet 2022 may have marked a nadir for crypto’s reputational risk. Between late 2021 and the end of 2022, the token market crashed 70% amid a spate of scandals, culminating in the collapse of Sam Bankman-Fried’s trading platform FTX. In March, a federal judge sentenced Bankman-Fried to 25 years in prison for fraud.
Coinbase and some other large crypto companies survived, though, and the token market recovered amid a broader rebound in risky assets. Sentiment also got a big lift last June with BlackRock’s application to launch an ETF holding spot Bitcoin. Even though its product and the other applications wouldn’t be approved until January, others on Wall Street took it as a signal that it was safe to move into crypto.
“We continue to focus on education and believe it’s imperative for investors to consider the potential upside of investing in bitcoin and its volatile characteristics and risks,” BlackRock said in a statement.
Today, the conversation isn’t so much about whether to own crypto as how much. A few years ago, pro-Bitcoin firms and advisors would make the case that a 0.5% slug could improve risk-adjusted returns, said VanEck director of digital assets product Kyle DaCruz. Now advisors talk about 3% to 5% to a portfolio, he says.
“There are still folks asking the question ‘Is this a real asset?’ But the numbers are far less,” says DaCruz, whose employer offers a Bitcoin ETF and aims to launch an ETF holding Ether , the second-largest cryptocurrency.
Many advisors are getting ready to offer crypto to clients. The major wealth managers— Wells Fargo , Bank of America , UBS , and Morgan Stanley —can already include Bitcoin ETFs in some portfolios if clients ask. Some of their executives have met with ETF sponsors to consider whether to allow advisors to suggest Bitcoin ETF trades to clients, according to people familiar with the matter. UBS has no plans to put the ETFs in portfolios on a proactive basis, a person close to the firm said.
Pro-crypto advisors say the ETFs solve two problems: They make Bitcoin more seamless to own, and they allow advisors to charge fees far more easily on digital assets.
“For the first time in Bitcoin’s history, we have an easy and familiar way for everybody to participate,” says Ric Edelman, founder of the Digital Assets Council of Financial Professionals. Far more advisors are now seeking crypto education, he says, as well as personnel at companies that run model portfolios for other advisors. “Let’s be honest, advisors can now bill on the assets,” he says.
Major banks are also coming around to crypto after arguing for years that many of the industry’s products—like high-yield accounts and stablecoins pegged to the dollar—were similar to bank products and should be regulated as such. Now, lobbying groups like the Bank Policy Institute and American Bankers Association are urging the Securities and Exchange Commission to change rules that make it difficult for banks to custody crypto tokens.
Wall Street still has skeptics. JPMorgan Chase CEO Jamie Dimon is one, calling Bitcoin a “pet rock,” though his firm has experimented with blockchain technology. Goldman Sachs Wealth Management chief investment officer Sharmin Mossavar-Rahmani recently told The Wall Street Journal that her firm’s executives are “not believers in crypto.” Vanguard remains unmoved, saying it won’t put the new Bitcoin ETFs on its brokerage platform due to the token’s lack of fundamentals.
Washington, for its part, is still cracking down on crypto. SEC enforcement is ongoing—notably a lawsuit the SEC is pursuing against Coinbase Global. SEC Chair Gary Gensler has said the entire industry is rife with fraud. Another big test is coming in May when the SEC will decide whether to approve ETFs holding Ether, the second largest token.
Firms including Coinbase have lobbied to convince Congress to pass crypto-specific rules though haven’t yet garnered enough support. The companies have given more than $80 million to pro-crypto political action committees this election cycle, a huge amount by Washington standards. The money will support crypto friendly candidates while blocking detractors.
“It gets harder and harder every year to find a crypto skeptic,” said Coinbase CEO Brian Armstrong put it at a D.C. policy event in March.
His comment reflects the fact that a technology meant to disrupt the financial industry is now being embraced as prices rise and fees roll in. While the Bitcoin bears may have been silenced for now, however, they may only be hibernating until the next crash.
— Paul R. La Monica contributed to this article.
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The 73-year-old star of ‘Wicked: For Good’ gets cameras flashing with his kooky off-screen style. Here, he discusses his morning stretch routine, a work-in-progress sock drawer and his antagonism toward fitness rings.
5 min
From a young age, Jeff Goldblum had an eye for clothes. Growing up in Pittsburgh, he wanted glasses like John Lennon’s and turtlenecks like the Rat Pack’s.
As a member of New York’s Neighborhood Playhouse studying under the legendary Sanford Meisner, he scoured vintage shops for Russian-style overcoats and aviator hats.
After his success in blockbusters like “Jurassic Park” and “Independence Day,” he went through a Japanese-denim phase and loved what he calls “I’ve-been-working-on-the-railroad-type vests.”
“I’ve swung wildly, and I’ve had a lot of bad ideas,” Goldblum said of his style on a recent Zoom.
The 73-year-old wore a bespoke green shirt from Anto, a shirtmaker based near his Los Angeles home.
On his feet were light-green socks, and handmade shoes from Florence, where he lives part-time with his wife, Emilie Livingston, and their two sons.
This month, he reprises his role as the Wizard of Oz in “Wicked: For Good,” the second installment of the film adaptation of the musical juggernaut. He insisted he’s not contracted by Universal Studios to only wear green on the press tour.
In the last decade the world has paid more attention to the actor’s off-screen style, which has evolved since he began working with stylist Andrew Vottero around 2014.
A silver-haired fixture on best-dressed lists, Goldblum often finishes his zany outfits with chunky black specs. He has collaborated with glasses label Jacques Marie Mage and formed a close relationship with Prada , walking its runway and appearing in a 2022 brand campaign.
Here, Goldblum, who regularly performs with his jazz band the Mildred Snitzer Orchestra, talks cashmere, vegan Bolognese and handshakes.
Studying with Sandy Meisner was: a portal into my more-intense interest in clothing. Everything could be a key to finding a character, behavior and discovering who you are in the story – (for example) how the shoe felt and how it made you walk.
You don’t really see: a 1970s-style long shirt collar in stores. I had this green shirt I’m wearing made at Anto in Los Angeles. I have them in a bunch of flavors, including some with Western buttons. I’m thinking about getting one in orange.
I just read: James Kaplan’s two-part biography of Frank Sinatra, whose favorite colour was orange. I’ve always liked orange.
I like: that Marie Kondo book “Tidying Up.” In my youth, my family left me alone one day in the garage. It seemed messy to me. I started to throw everything away. I was sweating under my arms with excitement. I got a big kick out of it.
My kids: like to wear my band merchandise. They sometimes help me dress. I say, “Hey, pick out what I’m going to wear.”
I’ve had to get cozy with one or two: leather jackets for parts like Ian Malcolm in “Jurassic Park.” I have a Saint Laurent motorcycle jacket that I wore the other day that’s kind of tight. I like it a lot.
I probably wouldn’t want to wear: real fur. I’ve stopped eating animals except fish. It’s part health-wise from my nutritionist and part my own feeling about it.
My favourite meal is at: Craig’s in West Hollywood. My wife and I share a chopped salad, minus the cheese, to start. They have a spaghetti squash primavera with broccoli and a spicy tomato sauce. I get it with shrimp or vegan Bolognese.
I’ve always been hypersensitive to: certain fabrics, such as wool. I’ve recently accepted—what’s that wool called?—cashmere. I don’t like things that itch. And I don’t like tags in the back of my shirt. I use a professional seam ripper to cut out tags.
What drives me crazy are: printing machines and my phone, especially how it breaks down so often. I had to deal with that this morning.
My feet must be: comfy cozy. My wife, a ballet dancer, says we’re not really working unless our feet are bleeding. I can’t accept that. I really like these handmade shoes I had made in Florence. They’re the most comfortable ever.
Florence is: a jewel box of a city. I’ve found the people delightful and the quality of life great. There are so many artisans. My favourite hat is one I purchased at the Borsalino store. I don’t know any Italian. Just a word here or there.
I don’t want to get sick so I prefer: fist bumping to a handshake. My knuckles have hurt from a too-hard fist bump. So let’s fist bump gently. Let’s just fist touch.
I have to organise my: sock drawer. It’s in the research and development stage. I’m very into socks of one kind or another. I like to experiment with a colour, which is why I have a light green pair on now. For tight shoes, I like (thin) Pantherella socks . I like a shorter sock, too. Sometimes I make it look like it’s falling down.
For a while I had an aesthetic allergy to: cobalt blue. You’d see it on a lady’s blouse sometimes, and I would go, “That hurts! It’s too bright.” But yesterday, after going to the Dodgers game with my kids, I put on a Dodgers blue cobalt sock, and I was very happy. So I’m nothing if not changeable.
I love: pockets. I recently got a minty green chore coat by the Row that I really like. Its flap pockets are deep enough that things aren’t going to fall out. I’d never even heard the term “chore coat.” It carries my wallet, keys, maybe a Kleenex, a lozenge, a little pillbox with an aspirin and some hand sanitizer.
I never used: sunscreen. But my wife has got me using Sarah Chapman sunscreen , sometimes even tinted. I’ll use a Joanna Vargas serum of some kind. I’m not sure what it’s doing, but I put it on at night. I imitate Boris Karloff (in the “Frankenstein” films) and I make a joke with Emilie that I’m going to my laboratory to work on my new longevity theorem.
My acid-reflux man said: “Take care of your vocal cords.” So I’m off caffeine. I’ll have a Ryze mushroom coffee in the morning—a scoop with hot water and oat milk. Sometimes the kids will make me a decaf cappuccino with oat milk and a sprinkling of chocolate powder, and that is too delightful.
For many decades: I’ve been totally on the natch. I’ll have a sip of red wine if Emilie says it’s really fantastic, but I don’t want to get loopy.
I get the usual: seven or eight hours of sleep. I stopped wearing my Oura ring. I’d be in bed for 8 hours and it would go, “No, Jeff, let’s call it 5½ hours that you got.” It used to say, “You’re somewhat ready for the day,” and I’d say, “Go to H-E-Double Hockey Sticks.” I threw the darn thing away. I go with how I feel.
When I wake up: I go through the little vestige of transcendental meditation I learned decades ago. I crack my bones and do this stretching routine that ends with my taking a tennis racket and going through the motion of a backhand, forehand and serve. Then I take a Centrum for Men multivitamin, play my piano and work out in our gym.
Early on I was: a lanky guy. Then I started lifting weights. I wanted to steer some of those roles that were a little nerdy—even those scientist parts—in a cooler direction.
Am I: nerdy or cool? Well, these days, according to some circles, the two have overlapped. At this point, who knows?
