More Wall Street Veterans Open Up to Bitcoin

TL;DR

• Vanguard has changed its course and will now allow Bitcoin ETPs on its platform.

• Bank of America wealth advisors can now recommend a 1-4% Bitcoin allocation. 

• JPMorgan enables indirect Bitcoin exposure with its new structured Bitcoin note.

Vanguard Will Now Allow Bitcoin ETPs on Its Platform 🚀

John Bogle is the founder of Vanguard and arguably one of the most influential financiers of the past century, as he introduced the world to ETF investing. 

When spot Bitcoin ETFs were introduced in January 2024, Vanguard's then-CEO, Tim Buckley, was a prominent voice against Bitcoin. 

The message was crystal clear: Vanguard won’t allow spot Bitcoin ETFs or ETP products on its platform.

But things are different now.

As of this week, Vanguard has enabled Bitcoin ETPs on its platform. 

Perhaps not surprisingly, the Vanguard news seemed to have had a positive effect on Bitcoin as well. On the day the news broke, BTC rallied by more than 6% and is currently trading at around $92,500. 

Vanguard currently manages about $11 trillion in assets under management and has over 50 million customers. 

Andrew Kadjeski, Head of Brokerage and Investments, stated: "Cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, performing as designed while maintaining liquidity…The administrative processes to service these types of funds have matured, and investor preferences continue to evolve."

To be clear, this doesn't mean that Vanguard is going all-in on crypto. It will treat Bitcoin ETPs and other cryptocurrencies as niche products, like gold, but it will shy away from memecoins. 

Nevertheless, this is a giant step in the right direction! Bitcoin ETPs are now available to 50 million more customers.

Bank of America's Wealth Advisors Can Now Recommend a 1-4% Bitcoin Allocation 🤯

Speaking of positive news, another giant financial institution in the U.S. made headlines this week. 

Bank of America's Wealth Management department announced this week that it will allow its wealth managers to propose a 1-4% portfolio allocation for BTC. 

The news broke a few hours after the Vanguard announcement.

Starting in January, wealth advisors will be able to advise customers to invest in four spot Bitcoin ETFs, including BlackRock's IBIT and Fidelity's FBTC funds, as well as Bitwise's BITB and Grayscale's GBTC. 

Bank of America's Chief Investment Officer, Chris Hyzy, said: "For investors with a strong interest in thematic innovation and comfort with elevated volatility, a modest allocation of 1% to 4% in digital assets could be appropriate…Our guidance emphasizes regulated vehicles, thoughtful allocation, and a clear understanding of both the opportunities and risks…The lower end of this range may be more appropriate for those with a conservative risk profile, while the higher end may suit investors with greater tolerance for overall portfolio risk."

This marks a significant shift for the bank. 

Previously, the bank's advisors were prohibited from recommending exposure to crypto products (while clients were free to invest as they chose).  

JPMorgan Introduces a Structured Bitcoin Note 👀

The last big financial institution I want to mention today is JPMorgan. They’re also offering Bitcoin exposure to their clients, but with a twist.

Rather than enabling Bitcoin ETP products or allowing wealth advisors to advise on a specific portfolio allocation, JPM announced that it’s introducing a structured Bitcoin note linked to BlackRock's Bitcoin ETF (IBIT) that fits BTC's four-year halving cycle.

The note provides a guaranteed minimum return of 16% if Bitcoin's price meets certain conditions, with potential for amplified gains by 2028. Specifically, investors in this structured Bitcoin note could earn 1.5x the ETF’s percentage gain with no upper limit, if the ETF surpasses JPMorgan's 2028-end set price. 

However, note holders face downside risk if the BlackRock Bitcoin ETF tied to the note falls more than 40% by 2028. If IBIT finishes below 60% of its initial value, investors share in the loss one-for-one and could “lose all of [the] principal amount at maturity,” according to JPMorgan.

Bitcoin's four-year halving cycle has been a key framework for many investors, and JPMorgan believes BTC could follow the same cycle in the coming years. 

In my opinion, it’s an interesting product, but you really need to know what you’re doing if you’re going to buy something like that. Arguably, the easier option for most investors who want to go long BTC is to just buy bitcoin directly.

Elsewhere in Bitcoin 📖

A quick look at what else has been happening in Bitcoin: 

• Vanguard effect? Bitcoin jumps 6% on the news of them allowing Bitcoin ETPs

• Abu Dhabi's Investment Council (ADIC) triples its Bitcoin ETF exposure

• BlackRock's in-house income fund increases IBIT exposure by 14%

• Polymarket sees a 91% chance of a Fed rate cut in December

• JPM’s Jack Caffrey sees Bitcoin as a market indicator 

Your fellow stacker in sats, 

Patrick Lowry

Disclaimer: The opinions expressed in this newsletter are solely those of the author and do not necessarily represent the views of any associated company. This newsletter is for educational and informational purposes only and should not be construed as investment, financial, or any other professional advice. Investing in cryptocurrencies is highly speculative and carries a significant risk of substantial financial loss, so you must conduct your own thorough research and consult with independent professional advisors before making any decisions.