A year after BlackRock launched its first-ever spot bitcoin exchange-traded product (ETP) in the U.S., the firm has seen a surge of interest, particularly from crypto enthusiasts who are new to Wall Street. Samara Cohen, BlackRock’s chief investment officer for exchange-traded funds (ETFs) and index investments, revealed that the demand stemmed from a need for a better way to access bitcoin—through the ETF wrapper.
The total market capitalization of all eleven spot bitcoin ETFs has surpassed $63 billion, with nearly $20 billion in total inflows. In just the past five trading days, spot bitcoin ETFs saw net inflows of $2.1 billion, with BlackRock accounting for half of those sales. This increase in volume aligns with bitcoin’s rise to its highest levels since July, trading above $68,300. Bitcoin also ended the third quarter up 140% year-on-year, outpacing the S&P 500.
Cohen emphasized that part of BlackRock’s strategy was educating crypto investors about the benefits of exchange-traded products. According to 13F filings, 80% of the buyers of these spot bitcoin ETFs in the U.S. are direct investors, with 75% having never owned an iShare product before. BlackRock found itself educating these new investors about how ETPs provide a more accessible and transparent way to invest in bitcoin.
Prior to the U.S. Securities and Exchange Commission’s approval of spot bitcoin ETFs in January, crypto investors primarily relied on centralized exchanges like Coinbase. However, the success of bitcoin ETPs has shown that many digital asset investors were looking for more secure and efficient ways to manage their investments. With North America being the largest crypto market globally, new data from Chainalysis indicates that the region accounts for 23% of all crypto trading volume, with $1.3 trillion in on-chain value received between July 2023 and July 2024.
Meanwhile, major financial institutions are gradually warming up to crypto. In August, Morgan Stanley became the first big bank to allow its 15,000 financial advisors to offer bitcoin ETFs from BlackRock and Fidelity to clients with a net worth over $1.5 million. However, many wealth managers are still conducting due diligence before fully embracing these products.
Jan van Eck, CEO of VanEck, drew parallels between the U.S. and European markets, noting that while private banks in Europe have been slow to adopt bitcoin or ethereum investments, there is growing interest from individual investors.
Cohen concluded that ETFs and blockchain technology share common goals, offering transparency and accessibility to investors. As decentralized finance (DeFi) continues to evolve, the intersection of traditional finance (TradFi) and blockchain will ultimately benefit investors by creating more transparent and accessible markets.
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