One Fund Manager Shares His Top Altcoin Pick

  • Laurent Kssis specializes in building cryptocurrency ETFs.
  • He recently left 21Shares, a leading European crypto investment firm with nearly $2 billion in AUM.
  • Kssis spoke to Insider about Solana’s soaring appeal and 21Shares’ business model.

Laurent Kssis first bought bitcoin when it cost just $345.

“My journey into crypto started in 2013 when the market was buoyant,” the former managing director of 21Shares told Insider. “There weren’t apps to look at your holdings, very few companies offered futures-based trading, and you couldn’t trade pairs.”

“I was very excited by the volatility it was producing,” he added. “When you mention the world volatility to a trader, they recognize that there’s money to be made.”

Kssis built on his 15 years of experience in the ETF world at 21Shares, a leading Swiss crypto investment firm that has seen its total assets under management soar by 700% to $2 billion this year, with star stock picker Cathie Wood joining the startup’s board in May. An ETF (exchange-traded fund) tracks a specific market, theme, or investing strategy; ETF inflows have hit a record high of $500 billion in 2021.

21Shares now offer 15 crypto ETFs, tracking bitcoin, ether, polkadot, solana, cardano, and several other tokens. But Kssis is set to leave the firm he helped to build, seeking new opportunities in the crypto space.

He spoke to Insider about why he sees solana as the altcoin that could displace ether, and broke down the factors driving 21Shares’ 700% surge.

The case for solana

Kssis said that investors have flocked to solana in recent weeks.

“Solana has been the jewel of the crypto market, with inflows of $60 million,” he told Insider. “When polkadot was launched in February, it had good inflows but nowhere near that.”

“It’s definitely a very honest contender to all of these other blockchains,” he added.

At the start of this year, solana was priced at $1.52. It rose steadily before a 330% surge between August and September, with prices now at the $150 level.

Solana even saw a 40% price increase on September 7, despite most cryptocurrencies crashing in the aftermath of El Salvador’s ‘bitcoin day.’ This has led to some analysts positioning it as a viable alternative to bitcoin and ether, with Coinfund’s head of liquid investments telling Insider that solana could become “the third megacap institutional asset.”

Kssis said that solana was benefiting from lower gas fees compared to other layer-one blockchains, including ethereum. A gas fee is the additional cost of a blockchain transaction.

“The gas fees are practically irrelevant,” he said. “There are huge fees if you want to buy NFTs on the ethereum platform, solana offers peppercorn fees in comparison.”

“EIP-1559 was supposed to reduce gas fees by 60% but it hasn’t, they’re still enormously expensive,” he added. “There’s a compelling argument that other blockchain technologies can now compete and disrupt the ethereum ecosystem.”

A 700% surge

21Shares’ total assets under management have risen from $250 million in January to just under $2 billion in nine months. Much of that success can be attributed to their various crypto ETFs — including HODL, ABTC, and AETH — drawing in significant inflows.

As the firm’s managing director, Kssis has launched crypto ETFs on stock exchanges in Amsterdam, Paris, and Vienna. He said that a crypto ETF offers a “palpable structure for institutional investors” who were potentially unnerved by crypto volatility or the possibility of fraud.

“A bitcoin ETF works the same as a gold ETF — there’s entitlement to bitcoin, a market-maker, an independent custodian and an administrator,” he said. “ETFs are cost-effective, they’re easy, and you can trade them day-to-day.”

As Kssis prepares to leave 21Shares, he described two reasons for its recent success to Insider.

First, he said the firm benefitted from the dual-listing of many of its ETFs.

“One of the problems in Europe is that it’s a fragmented market,” he said. “In order to have success, you need to be local — we did that by listing on many different exchanges.”

Unlike in the US, where a small number of exchanges cover most listed companies, European stock indices are highly fragmented. The dual-listing strategy has broadened the appeal of 21Shares’ products; for example, the HODL crypto basket ETF is available on the Swiss, Stuttgart, Düssledorf, and Munich exchanges.

Secondly, 21Shares’ products appeal to professional investors.

Institutional investors can’t buy cryptocurrencies because they are unregulated. The ETFs provided by 21Shares offer an alternative route into the marketplace.

“Investors tend to like to have 1% to 3% of their core portfolio exposed to bitcoin, but some have between 4% to 6% exposure, which is upwards of €500m,” Kssis said, explaining that this had created a significant opportunity for the firm. “By producing a bitcoin ETF you’re making the investor feel a lot more comfortable because they’re using a proven structure that is established in different markets.”

“Most portfolio managers are recognizing that crypto’s not going away — it’s an asset class that’s performing and will continue to perform,” he added. “If you’re not exposed to that asset class, you’re missing out.”

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