South Africa’s Sygnia Urges Caution on Bitcoin ETF Exposure
A $20 billion South African asset manager has been warning their investors from investing too much in their Bitcoin exchange-traded fund (ETF) due to its price volatility.
In an interview on Monday, Magda Wierzycka, the CEO of Sygnia, told Bloomberg TV that the company will intervene to ensure clients don’t shift too much of their portfolio to its ETF, Sygnia Life Bitcoin Plus, which is benchmarked off BlackRock’s iShares Bitcoin Trust.
However, she later acknowledged that Bitcoin could be turning into a long-term play.
Wierzycka said the primary concern from Sygnia, the second largest multi-manager in South Africa, is Bitcoin’s price volatility.
“The underlying asset is highly volatile. You need to be very sure about the messaging around it and you need to be sure that you don’t make promises that you can’t meet.”
In its fact sheet, the company also advises keeping investments in the Bitcoin vehicle at no more than 5% of discretionary assets or retirement annuities.
Bitcoin has been drifting between $111,644 and $114,548 per coin in the last 24 hours, while its seven-day range has been moving between $111,933 and $117,851, according to CoinGecko.
Sygnia is looking to offer more crypto ETFs
Sygnia’s Life Bitcoin Plus launched in June. It doesn’t allow users to directly hold Bitcoin.
Wierzycka said the ETF has seen “very, very significant” inflows and a lot of interest, but she didn’t disclose the total.
Sygnia’s messaging comes as the firm plans to launch more crypto ETFs on the Johannesburg Stock Exchange in the future after a previous attempt failed due to regulatory constraints, according to Wierzycka.
Crypto exchange-traded products logged $1.9 billion in inflows last week, with Bitcoin and Ether (ETH) leading the way with inflows of $977 million and $772 million.
Bitcoin is still a long term play
Wierzycka said that despite her company trying to persuade clients to limit exposure to Bitcoin ETFs, she has changed her view on the token, and now views it as a “long-term play,” rather than a speculative asset.
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However, she said it is overpriced at current levels. Bitcoin is trading hands for over $112,000 per coin after a recent market dip.
Other executives operating in the crypto ecosystem have forecast a more bullish price target.
BitMEX co-founder Arthur Hayes has speculated it could hit $250,000 per token by the end of the year, while Strategy founder Michael Saylor recently doubled down on his prediction of $21 million per Bitcoin by 2042.
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