The first fund to combine gold and bitcoin

The first exchange-traded product to combine gold and bitcoin into one fund debuted today.

According to Charlie Morris, CEO of ByteTree Asset Management, the company aims to make cryptocurrency a good long-term investment. He claims that ByteTree’s active rebalancing strategy will improve returns by 7-8 percentage points per year.
The fund will be rebalanced on a monthly basis based on 360 days of historical volatility, with the less volatile asset weighing more. In fact, this means that gold will tend to dominate, weighing between 70 and 90 percent.

“It struck me that bitcoin and gold have always been countercyclical. It’s obvious to me that bitcoin has always been linked to the stock market or risky assets in general, “Morris said.

Test results from the fund show that it is less volatile than 8 of the 10 largest US companies in the last 5 years, with only Berkshire Hathway and Johnson & Johnson doing better than it.

Experts say that if the fund had been launched in 2014, its return so far would have been around 363%. It should be borne in mind that since 2014 the return on bitcoin is 3816%, gold 58% and S&P 500 134%.

The annual fees for the fund will be 1.49 percent. Due to the difficulty of finding a trustee to deal with both physical gold and bitcoin, the fund’s fees have increased. ByteTree eventually split its custody between JP Morgan for gold and Coinbase for bitcoin.
Investors often think of bitcoin as an alternative investment in gold. A fund that owns both bitcoin and gold would be attractive to a number of investors.
However, not everyone is convinced of the future of the fund.

According to some analysts, the idea of gold is to serve as a hedge against high market volatility, arguing that gold will not continue to rise forever. According to them, given that it does not pay a dividend, it is pointless to just keep a large amount in the portfolio when market volatility is low.

On the other hand, if an investor does not want high volatility, he would buy something other than bitcoin.

Some analysts believe that the fund is meaningless and funds of this type rarely stay on the market for long, due to the fact that their operation is extremely complex, and their profits are based on fees.

 Dealer Anatoliy Pavlov

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