Is it time to take Bitcoin seriously?

Vishal Teckchandani: Welcome to Buy, Hold, Sell. My name is Vishal Teckchandani, and in this episode, we're going to ask an important question: Is it time to take Bitcoin seriously? In the same way we perhaps should we have taken technology stocks more seriously back in the 2010s? 

To challenge our thinking, I'm joined by Charlie Viola from Viola Private Wealth and Adam Dawes from Shaw and Partners. Will they warn us to steer clear of crypto and explore better alternatives, or is this an asset class you might want to consider, even as a small satellite position?

Adam, I'll start with you. Charlie, welcome. Does crypto as an asset class belong in an investor's portfolio - yay or nay? Why or why not?

Dawes says crypto has a place, but Viola isn't convinced

Adam Dawes: Yes, I think it does. Even though it's been around for over a decade, it's still in its infancy. I see it as part of an investment case. We're seeing larger fund managers and institutional buyers coming in. That said, there have been some disasters - Mt. Gox and the Trump meme coin are classic examples of pump-and-dump schemes. You have to be cautious. Cold storage wallets are probably the safest way to go - taking Bitcoin out of the system and keeping it secure. But yes, I do consider it an asset class that should be considered, albeit in a small allocation within a portfolio.

Vishal Teckchandani: Okay. Well, Adam's clearly a fan. Charlie, what about you?

Charlie Viola: No, not really. I'll be honest. We advise high-net-worth clients, and our stance is that if they want exposure, it should be a very small part of a well-diversified portfolio. But we don't specifically allocate to it. The lack of regulation, extreme volatility, and uncertainty around its price drivers - whether it's sentiment, Elon Musk tweeting, or Trump launching a coin - make it difficult to justify as a core investment. Over the years, we've also seen that it doesn’t function as a hedge; it tends to correlate with financial markets. So while we won’t stop clients from investing in it, we're certainly not building portfolios around crypto.

Major names are backing crypto, why isn't Viola?

Vishal Teckchandani: So, Charlie, while you'll execute trades for clients, let me play devil’s advocate. Looking at recent events - Donald Trump wants the U.S. to be the crypto capital of the world, Larry Fink has been vocal about Bitcoin, and ETF providers like VanEck, Monochrome, and Betashares are putting their name behind it - what would it take to convince you to allocate Bitcoin in Viola Private Wealth’s portfolios?

Charlie Viola: More robust regulation would be a good start. Also, safer ways to invest in it. To Adam’s point, some of the new ETFs are appealing - Monochrome’s Bitcoin ETF (CBOE: IBTC), for example, closely tracks the price of Bitcoin, with minimal tracking error. If we were to allocate to Bitcoin, we’d do it through a vehicle like that. But we need greater regulatory oversight and a clearer understanding of its underlying use case. Unlike tech companies, which generate earnings and add value, Bitcoin doesn’t produce revenue - it's purely speculative.

Vishal Teckchandani: Fair point. Now, Adam, Bitcoin does do something - it goes up, it goes down, and then it goes up again. What convinced you to include it in portfolios? And if I may ask, what is your asset allocation within portfolios for digital assets?

Adam Dawes: The original question was whether it’s an asset class, and I believe it is a growing one. But in terms of allocation, I'm with Charlie - we let clients decide. We don’t allocate large portions to it. For example, I typically hold a 5% weight in gold in client portfolios, but Bitcoin’s allocation would be much smaller due to its volatility. I remember when Trump’s election campaign drove Bitcoin past $100,000, my wife told me we should buy some. That was a warning sign for me - I told clients it might be time to take profits. When everyone starts talking about it, it’s often a signal of peak enthusiasm. So while Bitcoin has a place, investors need to be prepared for extreme volatility.

How to gain exposure to Bitcoin

Vishal Teckchandani: Let’s talk about your preferred method of investing in crypto. How are you doing it?

Adam Dawes: There are a couple of ETFs I like, Digitalx Bitcoin ETF (ASX: BTXX) and VanEck Bitcoin ETF (ASX: VBTC). Both track the Bitcoin price with minimal tracking error. Another way to get indirect exposure is through data centre investments - companies like NextDC and Goodman Group, which benefit from the infrastructure supporting crypto mining and digital assets. This way, you can gain exposure without holding Bitcoin directly.

Vishal Teckchandani: That makes sense. Charlie, you mentioned Monochrome earlier. Are there alternative ways you prefer to play digital assets?

Charlie Viola: Yes, and I agree with Adam — data centres like Goodman Group and NextDC are great plays. We also prefer ETFs that closely track Bitcoin or hold the underlying asset. Monochrome Bitcoin ETF (CBOE: IBTC)  is one we’ve been using for clients. Some investors have tried their hand at mining stocks like IREN (NASDAQ: IREN) and MARA Holdings (NASDAQ: MARA), but those come with significant volatility. If you’re getting into this space, be prepared for a wild ride.

Alternatives to digital assets

Vishal Teckchandani: Now, many investors struggle with Bitcoin because it’s intangible - you can’t value it, smell it, or touch it. For those hesitant about crypto, what alternative investments do you prefer?

Charlie Viola: I’d point them toward traditional asset classes that can still benefit from the growth of digital assets. As Adam mentioned, data centres are a great example. Beyond that, private credit and private debt are key areas we focus on. These are well-established asset classes that generate consistent returns. We believe in asset quality and diversification, and we don’t think crypto belongs in a core portfolio yet—unless clients explicitly request it.

Vishal Teckchandani: Any preferred ETFs or funds for private credit?

Charlie Viola: Yes, we like Qualitas Real Estate Income Fund (ASX: QRI), Gryphon Capital Income Trust (ASX: GCINB), and Metrics Credit Partners (ASX: MXT). These funds invest in high-quality, low-LVR, asset-backed credit, which we consider a more mature and stable market. However, investors should choose wisely and understand what they’re investing in, as risk levels in credit markets have increased.

Vishal Teckchandani: Adam, same question - outside of digital assets, what alternatives do you like?

Adam Dawes: Private credit is a big one, as banks have pulled back from mid-tier lending. But I do worry that there may be a bubble forming in this space, as more firms rush in. MXT is a solid option, and new entrants like MA Credit Income Trust (ASX: MA1)  and Dominion Listed Income Trust (ASX: DN1) have launched recently. Investors should be cautious about the rapid growth in private credit.

Charlie Viola: We’re big believers in private markets. In our business, we allocate 40-45% to private assets - private debt, private credit, real assets, and infrastructure. We avoid the term "alternatives" because it makes people think of speculative investments. These are normal, tangible assets, and we expect private markets to outperform public markets over the next decade.

Whatever you do, know your product and the underlying investments

Vishal Teckchandani: Final word to you, Adam?

Adam Dawes: I'm more focused on listed markets, but diversification is key. ETFs provide liquidity, which is a big advantage. Private markets can be lucrative but come with less liquidity. It all comes down to investor preference.

Vishal Teckchandani: Adam, Charlie, thank you! If you were looking for validation that crypto belongs in your portfolio, you might have found it today. Bitcoin has gone from a fringe idea to a trillion-dollar asset class. Love it or hate it, it’s here to stay. But as our experts said, whether it's Bitcoin or private credit, do your research and be mindful of bubbles. Thanks for watching. Don't forget to like, subscribe, and happy investing!