Portfolio Allocation and BTC/ETH Mix

• 70/30 Mix of BTC and ETH: Positive impact on portfolio’s Sharpe ratio
• Allocation Details:
  • Up to a 20% allocation to crypto
  • Example: 13% BTC, 6% ETH
  • Remaining 80%: 60/40 ratio stocks to bonds
• Volatility: 20% volatility manageable for young, healthy adults

Introduction

• Speaker: Matthew Sigel, Head of Digital Assets Research, Portfolio Manager at VanEck
• Firm Info:
  • VanEck: $100 billion assets
  • $2 billion in crypto
• Topics Covered: Bitcoin, Ethereum, miners, country interactions, regulations, portfolio construction, crypto-politics intersection

Bitcoin as a Sovereign Tool

• Countries Adopting Bitcoin:
  • El Salvador notable example: Bitcoin as negotiating tool with IMF
  • Other countries mining BTC: Kenya, Ethiopia, Argentina, Oman, Bhutan, UAE
• VanEck’s Role: Macro approach to wealth protection in dollar-debasement scenarios
• Sovereign Debt Crisis: IMF bailouts, political polarization, Bitcoin as a political tool in debtor countries

ETFs and Sovereign Wealth Funds

• BTC and ETH ETFs: Unlocking capital without asset sovereignty
• Institutional Adoption:
  • Developed countries may use ETFs to gain exposure to BTC/ETH
  • Emerging markets may prefer direct custody and mining

Publicly Traded Miners

• Current Landscape: Publicly traded BTC miners control ~1/3 global hash rate
• Challenges: Underperformance, volatility, dilution, AI narrative competition

Portfolio Construction

• Recommended Allocation:
  • 1-5% in digital assets
  • Traditionally: 50/50 BTC and other tokens
  • Evolving: 70% BTC, 30% ETH mix optimal
• Rebalancing: Quarterly rebalancing advised depending on performance

Regulation and Market Impact

• Regulatory Influence: SEC, CFTC, public market adoption
• Political Dynamics: Growing political support, demographic trends favoring younger, pro-crypto stance

Staking and Institutional Interest

• Importance of Staking: Critical to avoid dilution and maximize returns
• Ether ETF Staking: Potential future inclusion of staking could boost demand

Competitive Landscape

• BTC vs. Altcoins: BTC seen as digital gold, highest investor confidence
• Smart Contract Platforms: Ethereum’s competition with other platforms like Solana

Tokenization and Stablecoins

• Tokenization: Valued if resources allow, focus on open-source project ownership
• VanEck Ventures: Agora dollar entry to challenge Tether, sharing revenue model

Global Financial Shifts

• Geopolitical Concerns: Diversification into gold and potentially digital gold by countries like China
• Bitcoin as a Geopolitical Asset: Potential for enhancing U.S. reserves

Long-Term Vision and Innovation

• Future Opportunities:
  • Staking in ETFs
  • Global policy impact
  • Price projections for BTC, ETH, Solana: $325k, $22k, $3k respectively in bull cases

Actions for the Future

• Presidential Policies: Backing T-bill issuance with BTC, fostering a stable monetary regime
• Encouraging Innovation: Regulatory clarity and supporting global competitiveness in crypto

Follow-up Information:

• VanEck Digital Assets: Research and subscriptions available on VanEck website
• Social Media: Matthew Sigel’s Twitter, VanEck’s Twitter