Vanguard will soften anti-ETF stance, analyst predicts

Bloomberg’s senior ETF analyst Eric Balchunas predicts a potential softening in asset manager Vanguard’s rigid stance against spot Bitcoin exchange-traded funds (ETFs).

Recognized for its conservatism, Vanguard recently gained notoriety for maintaining a considerable distance from Bitcoin (BTC) and other digital currencies due to the sector’s volatile nature.

However, Balchunas suggests that the growing necessity for wealth expansion and diversified investments might nudge the Valley Forge, Pennsylvania-based firm in the opposite direction.

Vanguard, which manages assets valued at about $7.7 trillion, will likely reevaluate its position on alternative assets like spot Bitcoin ETFs, Balchunas says.

Vanguard’s anti-bitcoin ETF stance is totally on brand and would’ve made Bogle proud. That said, I think they will soften in the coming years as they build their advisory biz, they’ll need to have access to alts. They recently got into PE for this reason. I wrote about it today. pic.twitter.com/AFaD85B5ZR

— Eric Balchunas (@EricBalchunas) January 12, 2024

This conjecture arose amidst Vanguard’s recent move to limit customer access to the newly approved spot Bitcoin ETFs, a decision that sparked controversy in the crypto community. 

Some Vanguard clients, feeling constrained, have since transferred their funds to other firms that are more open to digital currencies.

Just transferred my 401k from Vanguard to Fidelity. It took about 15 minutes.

If you have an account with a broker currently blocking access to #bitcoin ETFs, close it and get out.

Make these boomers hurt

— Julian Fahrer (@Julian__Fahrer) January 11, 2024

In a further surprising move, Vanguard announced plans to withdraw Bitcoin futures ETFs from its platform, affirming its dedication to core investment values.

This decision, despite the burgeoning interest in the crypto market, was seen as a demonstration of Vanguard’s enduring skepticism of the crypto market.

However, some of the company’s investment trends tell a slightly different narrative. While Vanguard remains hesitant about Bitcoin, its substantial investment in MicroStrategy, a leading public holder of Bitcoin, has raised eyebrows. 

The company, co-founded by Bitcoin enthusiast Michael Saylor, holds a staggering 190,000 BTC, currently valued at more than $8.1 billion. 

According to Yahoo Finance, as of September 2023, Vanguard holds 1 million MicroStrategy shares, which were then worth more than $547 million. That makes them the second-largest institutional shareholder in the company after Capital International Investors.

Vanguard also reportedly invested heavily in Bitcoin mining companies last year, including Riot Platforms and Marathon Digital.

For that reason, analysts like Balchunas are contending that while Vanguard may be saying no to Bitcoin ETFs for now, their investments hint at a more nuanced approach to cryptocurrencies.