How VanEck plans to compete with BlackRock for Bitcoin ETF billions

VanEck is ready to tussle with BlackRock over its spot Bitcoin exchange-traded fund.

In an exclusive interview, Matthew Sigel, head of digital asset research at the asset management firm, told DL News VanEck can compete with its larger rivals.

“It’s a long game,” Sigel said.

“Some of our best clients are only just now opening up to trading these ETFs,” Sigel said.

VanEck expects a “very strong second half” as institutions pick up these products, he said.

The comments come days after the US Securities and Exchange Commission approved 11 spot Bitcoin ETF applications, including VanEck, BlackRock and Fidelity’s funds.

Sigel expects the game-changing move to not only open the floodgates for investors to more easily trade the digital asset, but also change their overarching strategy.

Massive first week

Investors already are piling in.

Over $4.3 billion in volume was traded on day one, or $2.2 billion in new products — excluding Grayscale’s GBTC.

While BlackRock and Fidelity saw the most volume, other issuers also posted impressive numbers.

VanEck’s ETF, which uses as its ticker symbol the crypto term HODL — a common crypto meme that started out as a misspelt “hold” but has taken on a new meaning as “hold on for dear life” — saw over $24 million in volume.

While this pales in comparison to rivals, it would eclipse nearly every other launch in the past year.

Wisdomtree’s Bitcoin ETF, with the ticker BTCW, was the least traded of all at $6.6 million, Bloomberg Intelligence ETF analyst Eric Balchunas said on Friday.

“That alone would be a banner first day for a new ETF, more volume than 95% of the 500 new products launched” over the past year, he added.

Long game

Sigel said VanEck expects a strong second half as big investment advisors slowly come around to letting clients gain exposure to Bitcoin.

However, other firms, such as $7 trillion dollar asset manager Vanguard, aren’t allowing any access to Bitcoin.

“It’s not just Vanguard who’s not letting clients trade these products, there’s other firms as well, and that’s going to change over the next year,” Sigel said.

VanEck is in a good position to pick up that business, he added, due to its relationships and history in the space.

It’s not uncommon for institutions to hold off on adding new products to their platform, Sigel said. UBS is one firm who is slowly adopting these products, and VanEck expects to be listed with the Swiss bank soon.

A source close to UBS told DL News on Thursday that select clients were being given access to some Bitcoin ETFs.

Clients will only be able to access these on an unsolicited basis, meaning they need to request to invest in them.

Another explanation for the slow adoption from the rest of Wall Street is firms doing work to incorporate Bitcoin into their asset allocation models, Sigel said.

Traditionally investment advisors recommend a 60/40 split in an investment portfolio between equities and bonds. That’s going to change.

“There’s going to be 60/38/2 models that incorporate Bitcoin and they’re going to come from some of the largest firms in the world,” he said.

With this will come passive institutional flows, and VanEck is “going to capture some of those,” Sigel told DL News.

VanEck also saw an uptick in activity into its European Bitcoin product, despite arriving late to that market in 2020 the firm has gained market share.

Fan favourite

While VanEck might not compete directly with the BlackRock’s of the world for institutional clients, the firm is a favourite when it comes to retail investors.

When VanEck launched its Ethereum Futures ETF in October, it made an effort to win over investors through savvy marketing campaigns.

This showed “forward-thinking around crypto,” Nate Geraci, president of financial advisory firm ETFStore said at the time.

That proactive approach could be paying dividends now.

“The retail interest in HODL was very strong, we had so many retail orders that the opening was delayed because the exchange had to come up with a good opening price,” Sigel said.

None of its trades were over 8,000 shares, suggesting it was popular with smaller traders.

None of its flows were pre-planned flows, and the firm said that individual interest will continue because of the “connection” they’ve made with so many clients and prospects on social media and in other ways.

Adam Morgan McCarthy is a markets correspondent for DL News. Have a tip? Contact the author at adam@dlnews.com.