Crypto has been all the rage in 2023, not just because of the otherworldly performance of bitcoin, but also because it looks like a bitcoin ETF could actually become a reality in the not-so-distant future. Dave Abner and Michael Watson both have deep experience in the financial services & asset management spaces, but now specialize more in the use of technology in the financial markets. They join the ETF Think Tank to talk about the latest development in blockchain, crypto and more.
As artificial intelligence continues to emerge, it seems very reasonable that it will eventually converge with blockchain. Watson agrees and says that the idea of putting an AI decision making process in place of a human is really fascinating. In terms of portfolio construction, humans are making the decisions to transact, but it’s not unreasonable or far off to think that a ChatGPT-run model could do the research and make the buy or avoid investment decisions. AI agents could also serve as compliance officers making sure it runs through certain pre-determined screens and safeguards. By automating the process, you’re able to potentially remove human liability for decision making by using AI.
On the technology side of data research, Watson says the latest trend is that a lot of development is existing data that’s getting more nuanced. People are always trying to fill in the gaps, especially for underrepresented populations & demographics and there’s a desire to model those folks. Proprietary research is getting better and data models continue to improve. There’s a lot of value in stuff that’s proprietary and fundamental data & analysis is getting bigger again.
The conversation shifted to the potential for a Bitcoin ETF. Abner believes that the probability of a Bitcoin ETF getting approved eventually is close to 100%. We don’t have clarity on timing yet, but we’re on the approval path and it’s no longer considered a multi-year timeline like it was not so long ago. There will be at least one and probably multiple funds trading over time. He wouldn’t be surprised if we saw a scenario where Bitcoin sentiment leads to a Bitcoin rally ahead of a Bitcoin ETF launch.
Abner suggests that the approval of a Bitcoin ETF could potentially pave the way for the introduction of other cryptocurrencies into the ETF structure. Issuers are already thinking about this. There’s more talk about coins being actual securities and we’re seeing traditional securities and the token market coming together. Abner doesn’t know how it will play out, but he believes the trajectory is very likely to continue. If a bitcoin ETF gets approved, an ethereum ETF could potentially be next.
Other key takeaways:
- Are you seeing data creators being able to monetize data or is it all about creating? Watson says someone with deep domain expertise can charge a high price, but it really ends up being one-time use. There’s some potential in digital access to some datasets for a monthly fee.
- Watson says that having good ideas is more important than either the acquisition cost of data or the technology needed for data modeling.
- Abner says it’s not really important whether or not a bitcoin ETF launches before or after halving. Everybody is trying to pull all these events together as if they’re massively interrelated. From an operational standpoint, it won’t be an interesting event.
You can watch a replay of this virtual happy hour on our YouTube channel here. While there, subscribe to our channel to stay up to date on our latest content.
Disclosure
All investments involve risk, including possible loss of principal.
The material provided here is for informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Toroso nor any of its affiliates guarantees any rate of return or the return of capital invested. This commentary material is available for informational purposes only and nothing herein constitutes an offer to sell or a solicitation of an offer to buy any security and nothing herein should be construed as such. All investment strategies and investments involve risk of loss, including the possible loss of all amounts invested, and nothing herein should be construed as a guarantee of any specific outcome or profit. While we have gathered the information presented herein from sources that we believe to be reliable, we cannot guarantee the accuracy or completeness of the information presented and the information presented should not be relied upon as such. Any opinions expressed herein are our opinions and are current only as of the date of distribution, and are subject to change without notice. We disclaim any obligation to provide revised opinions in the event of changed circumstances.
The information in this material is confidential and proprietary and may not be used other than by the intended user. Neither Toroso or its affiliates or any of their officers or employees of Toroso accepts any liability whatsoever for any loss arising from any use of this material or its contents. This material may not be reproduced, distributed or published without prior written permission from Toroso. Distribution of this material may be restricted in certain jurisdictions. Any persons coming into possession of this material should seek advice for details of and observe such restrictions (if any).
