A $20 billion South African asset management firm has cautioned its investors against allocating excessive funds to their Bitcoin exchange-traded fund (ETF) because of its price fluctuations.
During a Monday interview, Magda Wierzycka, CEO of Sygnia, stated on Bloomberg TV that the firm would intervene to prevent clients from shifting too large a share of their portfolio into its ETF, Sygnia Life Bitcoin Plus, which is benchmarked to BlackRock’s iShares Bitcoin Trust.
Nevertheless, she later recognized that Bitcoin could be evolving into a long-term investment.
Wierzycka mentioned that the main concern for Sygnia, the second largest multi-manager in South Africa, is the volatility associated with Bitcoin’s price.
“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.”
According to the firm’s fact sheet, it also recommends that investments in the Bitcoin vehicle should not exceed 5% of discretionary assets or retirement annuities.
In the last 24 hours, Bitcoin has oscillated between $111,644 and $114,548 per coin, with its seven-day range transitioning between $111,933 and $117,851, as per CoinGecko.
Sygnia plans to expand crypto ETF offerings
The Life Bitcoin Plus fund from Sygnia was introduced in June, and it does not allow direct Bitcoin holdings.
Wierzycka indicated that the ETF has experienced “very, very significant” inflows and considerable interest, but did not reveal specific figures.
Sygnia’s communication coincides with plans to launch additional crypto ETFs on the Johannesburg Stock Exchange in the future, following a previous effort that faltered due to regulatory challenges, according to Wierzycka.
Last week, cryptocurrency exchange-traded products recorded $1.9 billion in inflows, with Bitcoin and Ether (ETH) leading the pack with inflows amounting to $977 million and $772 million, respectively.
Bitcoin is perceived as a long-term investment
Wierzycka noted that, although her firm is encouraging clients to limit their Bitcoin ETF exposure, her perspective on the token has shifted, viewing it now as a “long-term play” rather than merely a speculative asset.
Related: Biggest long liquidation of the year: 5 things to know in Bitcoin this week
Nonetheless, she commented that it is overpriced at its current levels, with Bitcoin trading at over $112,000 per coin following a recent market downturn.
Other leaders in the crypto space have predicted a more optimistic price trajectory.
BitMEX co-founder Arthur Hayes has speculated it may reach $250,000 per token by the year’s end, while Strategy founder Michael Saylor recently reaffirmed his prediction of $21 million per Bitcoin by 2042.
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