Why Is BlackRock Holding Back on Crypto ETFs?

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As a seasoned crypto investor with a decade of experience under my belt, I find myself both encouraged and intrigued by BlackRock’s strategic approach to crypto ETFs. Having weathered numerous market cycles and witnessed the rise and fall of countless altcoins, I appreciate their cautious yet calculated move towards sustainable growth.

Bitcoin recently surpassed its all-time high at $103.9K, surprising many skeptics. Some experts predict an even greater ascent due to the popularity of Bitcoin ETFs and global adoption. Notably, BlackRock has significantly contributed through their IBIT and ETHA ETFs, attracting worldwide focus on Exchange Traded Funds (ETFs). However, despite the demand and success, the company remains cautious about launching additional crypto-based ETFs for a straightforward but significant reason.

BlackRock Executive Revealed ‘Why No New Crypto ETFs’

BlackRock has a 99.9% ETF approval rate, and because of this, investors and delegates have demanded a few more altcoin ETFs. However, the firm is likely to put a hold on that, as they have focused on Bitcoin and Ethereum ETFs for now. The senior ETF analyst at Bloomberg, Eric Balchuna, revealed this through a recent X post, sharing a statement of Jay Jacobs, U.S. Head of Thematics and Active Equity ETFs, BlackRock. As per the post, the firm is just at the tip of the iceberg with Bitcoin and Ethereum, as they need to explore and develop more with these ETFs. More importantly, Jay claimed that only a fraction of the clients own IBIT and ETHA. As a result, they are more focused on improving that instead of new crypto ETFs.

As a researcher, I’m keen to emphasize that we’ve barely scratched the surface when it comes to understanding and exploring the potential of Bitcoin and Ethereum. A minuscule percentage of our clientele currently holds these digital assets, which is where our primary focus lies. In contrast to launching new Exchange-Traded Funds (ETFs) based on alternative cryptocurrencies, we’re more concerned with delving deeper into the opportunities offered by Bitcoin and Ethereum.

— Eric Balchunas (@EricBalchunas) December 12, 2024

Investors have shown approval for BlackRock’s strategy regarding the potential release of more Crypto ETFs. One investor, in particular, praised a gradual approach, stating that prematurely launching a new ETF could amplify market volatility.

A gradual, phased strategy works best for the overall crypto market. Rushing to introduce new Exchange Traded Funds (ETFs) may escalate market volatility rather than fostering a well-informed embrace of cryptocurrencies.

Instead, it’s worth noting that Bitwise has just submitted applications for 10 different Cryptocurrency Index ETFs to the U.S. Securities and Exchange Commission. This move is significantly advancing the acceptance and use of these financial instruments.

Bitcoin and ETFs Days Long Imports Making Waves

The surge in popularity of Bitcoin ETFs has significantly increased the desire for Exchange-Traded Funds (ETFs). In fact, international investors poured an astounding $204.6 billion into global ETFs during November alone. According to iShares, this amount nearly equals three-quarters of the money invested in U.S. stock funds over the same period. This trend underscores the high demand for these investment vehicles among those seeking secure options.

Currently, the Bitcoin ETF is experiencing net inflows for 11 consecutive days, with a total inflow of $598 million on December 12, according to Coingalss data. It’s worth noting that IBIT added $432 million to this flow, increasing the overall net assets of the Bitcoin ETF to approximately $112.546 billion.

Remarkably, the Ethereum ETF is following a similar path. For 14 consecutive days, it has seen net inflows totaling $274M on December 12, 2024, with ETHA accounting for $202M. This marks significant milestones for the ETH ETF. Concurrently, there’s growing interest in altcoin ETFs such as Solana, XRP, and Shiba Inu. Mike Venuto of Tidal, a popular ETF launcher, shared that they frequently encounter proposals for unique ETF combinations like Bitcoin paired with other assets. Interestingly, he also hinted that various investment strategies will soon be linked to Bitcoin, Nvidia, Tesla, and MicroStrategy in ETFs.

Every options strategy you can think of is going to be tied to Bitcoin, Nvidia, Tesla, and MicroStrategy in ETFs. It’s coming” – Mike Venuto of Tidal.

BlackRock Set Slow Pace For Crypto ETFs

BlackRock appears to be adopting a conservative strategy when it comes to launching new crypto ETFs, aiming instead for gradual, sustainable growth and careful adoption. According to Bloomberg’s analysis, the firm is concentrating on well-established Spot ETFs such as Bitcoin and Ethereum, rather than venturing into a wider range of altcoin ETFs. This move has garnered approval from investors, who prefer stability over volatility. Notably, the success of Bitcoin and Ethereum ETFs has sparked growing interest in further launches, underscoring their significant influence on investor sentiment and Bitcoin’s price, which is currently approaching $100K.

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2024-12-13 13:12