BlackRock’s main entrance building in Manhattan features a marquee that is an iconic symbol of the company. A year ago, Samara Cohen, the chief investment officer for BlackRock’s exchange-traded funds and index investments, believed that there was a high demand for bitcoin. This led to the launch of one of the first spot bitcoin exchange-traded products in the U.S. Now, investors are showing significant interest in these products, with many new crypto enthusiasts entering the market.
The total market cap of spot bitcoin ETFs in the U.S. has surpassed $63 billion, with total flows nearing $20 billion. In recent trading days, these ETFs have seen net inflows of over $2.1 billion, with BlackRock accounting for a significant portion of these sales. The surge in trading volume coincides with bitcoin reaching its highest level since July, trading above $68,300. The cryptocurrency ended the third quarter up around 140% compared to the same quarter last year, outperforming the S&P 500.
Cohen noted that part of the strategy in attracting customers to these funds was to educate crypto investors on the benefits of exchange-traded products (ETPs). Recent 13F filings revealed that 80% of buyers of these new spot bitcoin products were direct investors, with 75% of them having never owned an iShare before.
Before the U.S. Securities and Exchange Commission approved spot bitcoin funds in January, investors had limited options to buy and store cryptocurrencies. The introduction of bitcoin ETPs has provided a better solution for digital asset investors, highlighting the need for more accessible products in the market.
The U.S. remains a significant market for digital assets, with North America accounting for nearly 23% of all crypto trading volume. Data from Chainalysis shows that between July 2023 and July 2024, there was $1.3 trillion in on-chain value received. The State of Crypto report from a16z revealed that over 40 million Americans hold crypto.
Wealth management clients have been the primary drivers of adoption for these new spot crypto products. Firms like Morgan Stanley have allowed financial advisors to pitch bitcoin ETFs to clients with a net worth over $1.5 million. However, other firms are still conducting due diligence before fully endorsing these products.
VanEck CEO Jan van Eck highlighted the slow adoption of crypto products among wealth managers, drawing comparisons to the European market where the company has seen more success. He emphasized the importance of clear regulations from lawmakers to increase comfort levels with crypto investments.
Cohen sees similarities between ETFs and blockchain technology, noting that both have brought transparency and access to traditional finance markets. The decentralizing force of ETFs has accelerated growth since the 2008 financial crisis. She believes that marrying the goals of these ecosystems can benefit investors in the long run.