On July 9, 2024, Matthew Sigel, Head of Digital Assets Research at VanEck, spoke with Tony Edward, the founder and host of the YouTube series Thinking Crypto. During the interview, Sigel provided detailed insights into VanEck’s crypto strategy, the impact of new ETFs, regulatory challenges, and his outlook for the digital assets market.
Background and Career
Sigel shared his professional journey, highlighting his early career in journalism at Bloomberg and CNBC. He mentioned his early recognition of the phenomenon of fake news, which led him to leave journalism and pursue a career in finance. Sigel worked at Alliance Bernstein, covering tech stocks and learning about disruptive innovation. His exposure to the potential of open-source technology primed him for his later embrace of Bitcoin and crypto assets.
VanEck’s Crypto Strategy
Sigel explained that VanEck, a traditional ETF and mutual fund manager, has embraced digital assets as a significant part of its portfolio. He detailed the firm’s history, starting from its founder’s focus on international mutual funds and later gold mining stocks. This hard money mentality led VanEck to view Bitcoin as a potential disruption to their gold mining profit pool. Sigel noted that VanEck now manages over $2 billion in digital assets across more than 15 different products, including ETFs and actively managed liquid token funds.
The Role of Social Media
Sigel emphasized the importance of social media in modern investing, crediting it with changing how capital formation occurs. He discussed how social media platforms have allowed retail investors to band together, citing examples like GameStop and meme coins. Sigel noted that this democratization of investment has challenged traditional financial power structures and created new dynamics in the market.
Bitcoin ETF Performance and Inflows
Sigel expressed satisfaction with the performance of Bitcoin ETFs, noting that they have garnered significant inflows and solidified the asset class’s legitimacy. He highlighted that hedge funds were early adopters of Bitcoin ETFs, but he expects that financial advisors will follow suit, leading to even greater inflows in the future. Sigel believes that Bitcoin ETFs will see triple the amount of assets within a year, reaching over $150 billion.
Ethereum ETFs and Staking
Discussing Ethereum ETFs, Sigel shared his optimism about their approval and potential inflows. He noted that the lack of staking might slightly decrease their attractiveness but still expects significant inflows. Sigel highlighted the benefits of staking, which has materially added to the performance of Ethereum holdings in VanEck’s liquid token strategy.
Solana ETF and Future Products
Sigel provided insights into VanEck’s Solana ETF application, explaining that the firm views Solana and Ethereum as fundamentally similar in terms of decentralization and utility. He expressed confidence that regulatory approval would eventually come, although it might require a change in SEC leadership. Sigel also hinted at future product developments, including basket ETFs and further tokenization of assets.
Potential for Spot XRP ETFs
Sigel addressed the potential for spot XRP ETFs, noting that while VanEck has considered various factors, they currently lack the internal conviction and customer demand necessary to pursue an XRP ETF. He emphasized that bringing an ETF to market requires multiple stakeholders, including regulatory approval, issuer conviction, and customer interest. At this time, Sigel indicated that these elements are not sufficiently aligned for an XRP ETF to be viable.
Regulatory Landscape and Future Outlook
Sigel discussed the complex regulatory environment, particularly the ongoing legal battles involving the SEC. He expressed hope that a new administration might bring more clarity and a friendlier approach to digital assets. Sigel believes that the crypto market will continue to grow, with institutional adoption increasing and new investment products being developed.
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