It could be an eventful year for trend-based investing.
If you ask industry leaders, the long-awaited bitcoin ETF, cannabis plays and ESG (environmental, social and governance) investing will continue to make headlines in 2020 as interest in the groups grows.
Here’s what two Wall Street professionals â Tom Lydon, CEO of ETF Trends and president of Global Trends Investments, and Nick Colas, co-founder of market research firm DataTrek â see ahead for the three trends.
Bitcoin bulls probably have a bit more waiting to do.
A bitcoin ETF from Bitwise Asset Management came closer than it ever had to being approved by the Securities and Exchange Commission in October of last year, according to Matt Hougan, Bitwise’s head of research, only to be rejected again for concerns around potential fraud and manipulation.
The latest hiccup in issuers’ yearslong battle for a bitcoin-based ETF has put a slight hold on cryptocurrencies’ entrance into the exchange-traded fund space. Bitwise’s top management wrote in a letter to the SEC in December that the firm remained “committed” to bringing a bitcoin ETF to market that addressed regulators’ concerns.
For Lydon, the whole process has been a bit like the movie “Groundhog Day,” he said in a Monday interview with CNBC’s “ETF Edge.”
But “a couple good things … have happened,” Lydon said. “First of all, the SEC approved the first ’40-Act-approved ETF.”
Lydon, who put 60% odds on a bitcoin ETF receiving full SEC approval in 2020, was referring to the Investment Company Act of 1940, which regulates companies that invest or trade securities and sell their own shares to investors. The NYDIG Bitcoin Strategy Fund from Stone Ridge Trust was the first bitcoin-based fund to receive approval via the ’40 Act, though, as Lydon noted Monday, it has a $25 million limit on its assets.
“Like a regular mutual fund, like the Magellan Fund, there’s a sister mutual fund out there where you can invest in bitcoin,” Lydon said of the NYDIG product. “The more [that bitcoin-based products] can get on public â¦ account statements like your Schwab account, like your TD account, that’s going to help things out.”
With the Chicago Mercantile Exchange launching options on bitcoin futures Monday, that could help the digital currency’s chances, Lydon added.
DataTrek’s Colas wasn’t as bullish, putting his odds of bitcoin ETF approval this year at 10% in the same “ETF Edge” interview.