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Cryptocurrencies & Bitcoins

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“Congratulations, if you made it this far on my website, you are going in the right direction. I will assume you are either an investor in cryptocurrencies, someone who is thinking of investing in cryptocurrencies, or you are a lawyer who represents an investor who has lost a lot of money investing in cryptocurrencies. I should be able to help all of you. There are numerous places on this website that talk about my experience and expertise, and you also can find a number of accolades and differences from investors and lawyers I have worked for during my 40 years of helping lawyers and investors. In addition to being a registered and licensed stockbroker, I was also a registered and licensed commodities broker. This is useful because cryptocurrencies are now covering both professions. In my professional career, I have personal extensive experience in both securities and commodities with both the speculative trading side and various hedging strategies. Call for a free consultation

risk & Danger for cryptocurrencies investing in bitcoins can be dangerous to your financial health

There are all kinds of adjectives that can be used to describe the incredible surge in interest in bitcoins in just the past year: bubble mentality, foaming at the mouth, excessive exaggeration, out of control and off the charts, just to mention a few. At the young age of 73, I have witnessed personally previous bubbles which have been disastrous for investors. And as a securities expert, I have studied extensively bubble driven investment fiascoes.

There was the tulip bulb mania in the early 1600’s in Europe, which is often considered one of the first financial speculative bubbles in history. In the United States, one of the first bubbles was the railroad stocks and bonds, where Americans lost millions. There was the Hunt brothers silver crash in 1980, started and orchestrated by the Hunt brothers who tried to corner the market in silver. As the Hunts tried to corner the market on silver they drove the price of silver up. Thousands of investors jumped on the bandwagon only to lose millions when the market crashed. More recently, we had the telecom and technology bubble and stocks that fizzled in 2001. And of course, we all remember firsthand the subprime debt related real estate bubble/bust in 2007.

Despite this, everyone is jumping on the bitcoin bandwagon. The CFTC recently approved trading futures on bitcoins. As of 2024, investors can now trade in bitcoin ETFs. It is this last item that concerns me the most. Opening an ETF to every single American who has a brokerage account is exposing millions to this very dangerous, speculative and volatile market.

I am not condemning the cryptocurrency of bitcoins or any other related product. And I am not questioning its use as a currency. I am only warning investors about utilizing these instruments as investments, albeit speculative ones. I will be researching and writing about bitcoin in the near future, but for now keep in mind that a very large percentage of the people who are buying and speculating in bitcoins are in Southeast Asia. The Southeast Asian investment markets are known for unregulated and excessive bubbles. The mere fact that bitcoin and cryptocurrencies have had phenomenal run ups in value in just the last two years alone should give investors cause for concern from an investing standpoint.

The mere fact that some lucky investors made millions because they were on the front end of many of the cryptocurrency startup operations does not mean you should jump on the bandwagon. There is an age-old warning for investors who chase ever increasing investments; don’t be the last man in. At some point in the future, some of the remaining cryptocurrencies may become legitimate investment vehicles. At this point, as trading vehicles, they are nothing more than speculative investments.

Here is an interesting article from the Wall Street Journal:

The Boom in Crypto ETFs Has a Downside for Investors

Investors face higher costs and the unwelcome prospect of fund closures as more digital-asset funds come to market

By Tanzeel Akhtar June 4, 2026 2:00 pm ET Wall Street Journal

Kiersten Essenpreis for WSJ

Many crypto ETFs launched since January 2024 face closure risk, with analysts predicting up to a third could shut within two years.

A boom in cryptocurrency exchange-traded funds has given investors more ways to buy digital assets over the past 2½ years. But more isn’t always better.

The problem for investors is that many of these new funds carry higher fees, as well as the risk of closure for funds that don’t gain traction.

Since U.S. regulators approved spot crypto funds—those investing in a single cryptocurrency—in January 2024, asset managers have launched 130 funds and attracted tens of billions of dollars in assets. And asset managers are racing to replicate that success with 155 digital-asset ETFs in the pipeline, according to Morningstar Direct data.

But investor demand remains concentrated in low-cost bitcoin and Ethereum products from major issuers such as BlackRock and Fidelity Investments, leaving many newer products struggling to attract meaningful assets or reach viable scale. Analysts warn that as many as a third of crypto ETFs could shut within two years, leaving investors with an unwelcome disruption.

Fund closures force investors out of their positions—potentially triggering capital-gains taxes and possibly leading them to find replacement exposure, often during turbulent markets.

“When a fund closes, it’s liquidated,” says Elisabeth Kashner, director of global fund analytics at FactSet. “The portfolio manager will sell the positions, turn everything to cash, and that will go out to clients sort of the same way that a dividend payment would.”

Survival of the biggest

The crypto ETF market reflects investors’ preference for low-cost funds. Within spot bitcoin ETFs, BlackRock commands nearly 60% of market share, with Fidelity capturing an additional 13%—meaning the two firms together control roughly 72% of overall spot bitcoin ETF assets, according to FactSet data. The biggest funds, BlackRock’s iShares Bitcoin Trust ETF (ticker:

IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC), both charge annual fees of about 0.25%, putting pressure on higher-cost competitors.

The fee pressure has created casualties even among established players. Grayscale Bitcoin Trust ETF (GBTC), one of the original crypto funds before spot ETFs gained approval, still charges1.5% annually—six times as high as competitors. The fund has seen more than $26.3 billion innet outflows since January 2024 as investors migrated to cheaper alternatives.

The average bitcoin ETF holds about $8 billion in assets, according to Bloomberg Intelligence, nearly three times the $3 billion average for U.S. ETFs generally. By contrast, many altcoin-focused funds—products tracking cryptocurrencies other than bitcoin and Ethereum—havestruggled to attract investor dollars.

Products typically need at least $25 million to $100 million in assets to remain economically viable, says Daniel Sotiroff, senior manager research analyst at Morningstar, though the exact threshold depends on the issuer’s size and willingness to subsidize underperforming funds. Manyrecently launched crypto ETFs fall well short of that range.

“Generally speaking, about a quarter of all ETFs liquidate,” says Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. “In a category like this, where there’s such a land rush, you’re probably looking at 30% to 35% that will cease to exist in a couple of years.”

So far a dozen U.S. crypto ETFs have shut, according to FactSet, but the industry’s next phase may be harsher: The firm’s analysis shows 34 crypto ETFs currently trading are at high risk ofclosure.

Understanding the risks

While investors don’t lose their money when ETFs liquidate, unexpected closures can be disruptive. Liquidation can force investors to realize capital gains in that tax year if the ETF had gained in value, even if they would have preferred to keep holding. That could generate an unexpected tax bill in taxable accounts.

What’s more, a liquidation could disrupt an investor’s portfolio allocation. While crypto is likely a small portfolio allocation for most investors—typically 1% to 5%, according to analysts—restoring that allocation could be costly given the volatility of digital assets.

Investors who want to maintain their allocation may need to quickly find a replacement fund, potentially incurring additional trading costs or re-entering the market at less favorable prices if prices have moved sharply.

Beyond closure risk, thinly traded crypto ETFs often carry hidden costs. Funds with limited trading volume typically have wider bid-ask spreads—or the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for an asset—making them more expensive to buy and sell.

“When you have products that are functionally identical, do a deep dive into the operating efficiency and the trading costs,” Kashner says. “Look for low expenses, look for low trading spreads.”She explains that investor buying and selling serves as an early warning system for a fund’s future. “In general, when flows are positive, an asset manager might have more patience with a product,” she says. “Whereas if flows are nonexistent or negative, you know that it’s harder to keep a fund open on hope alone.”

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