Bitcoin ETF catalyzing broader merge of TradFi, crypto: BlackRock exec

Bitwise’s chief investment officer said he expects major wirehouses to start clearing access for the US BTC funds in a few weeks

article-image

BlackRock managing director Tony Ashraf | Ben Solomon Photo LLC for Blockworks

share

The US spot bitcoin ETFs have moved forward the broader coming-together of traditional finance and crypto, according to an executive at the world’s largest asset manager. 

Speaking at a panel during Blockworks’ Digital Asset Summit in London on Tuesday, BlackRock managing director Tony Ashraf noted the impact of having large financial players wrapping bitcoin into an ETF.

Going the other way, crypto industry firms and innovations are starting to evolve traditional finance via asset tokenizations, a process that involves bringing physical and financial assets on-chain. 

Read more: TradFi, DeFi convergence continues through tokenizing real-world assets

“We have a duality between traditional finance and crypto starting to manifest in a very different way because of the catalyst of [bitcoin] ETFs,” Ashraf said. “I think…we’re going to see more of that convergence happening in the future.”

BlackRock managed roughly $10 trillion in assets, as of Dec. 31. The company launched one of the 10 US bitcoin ETFs that hit the market on Jan. 11. 

That fund, the iShares Bitcoin Trust (IBIT), has so far dominated competitors from a net inflows perspective.

IBIT’s net inflows amounted to nearly $13 billion at market close Monday, BitMEX Research data shows. That is nearly double the second-best asset gatherer — Fidelity Investments’ Wise Origin Bitcoin Fund (FBTC) — with $6.9 billion. 

Grayscale Investments’ Bitcoin Trust ETF (GBTC), which remains the biggest fund in the space, has seen nearly $12.5 billion of net outflows thus far. 

Read more: Is it too soon to name BlackRock the bitcoin ETF segment winner?

Increased access to usher in new client segment

Ashraf argued one cannot underestimate the impact of who can now allocate to crypto given the approval of the US bitcoin ETFs.

“We have a whole new demographic of investors coming into this space who have a different way of perhaps buying, holding and using the ETF structure,” he said.

The 10 US spot bitcoin ETFs brought in about $2.5 billion of net inflows last week, a record for the segment. The category endured net outflows on Monday for the first time since March 1 — amounting to $154 million, according to BitMEX Research data.

Still, Bitwise Chief Investment Officer Matthew Hougan said on the Tuesday panel with Ashraf he expects assets under management in the US bitcoin ETFs could grow from roughly $50 billion today to hundreds of billions of dollars in the next few years. 

Initial interest in the funds has been through self-directed retail investors and registered investment advisers (RIAs). 

The bitcoin ETFs are not yet widely accessible on national account platforms — such as Morgan Stanley, Merrill Lynch, Wells Fargo and UBS — that are still in the process of approving the funds for their advisers, Hougan noted.

Read more: Restricting access to growing bitcoin ETFs becoming ‘hard to justify’

But the Bitwise CIO said he expects one or more of the major wirehouses to clear access to such funds in as little as a week from now.  

“You should think of the flows we’re seeing into these ETFs as like a spigot turned on 20%,” Hougan said. “There’s another 80% to go, and that process is going to take place for a while.”

Leon Marshall, CEO of Galaxy Digital’s European business, said during the panel that as allocations via RIAs and wirehouses increase, so too will liquidity.

This liquidity is likely to spur more interest from corporates, sovereign wealth funds and central banks, he added.  

“They’ll only get interested in an asset class once it reaches a certain assets under management,” Marshall said. “So bitcoin does benefit from an effect of, the bigger it gets, the more attractive it becomes as an asset class for new client segments.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

The US spot bitcoin fund category has notched negative net flows over the course of a week just three times since coming to market in January

article-image

Elsewhere, rank-and-file employees move around and Binance’s head of legal in Europe departs

article-image

Plus, a Dragonfly partner shares his view on the crypto VC market, and a mining hardware firm raises $80 million

article-image

Plus, a Bored Ape burger restaurant closes, and Crypto: The Game presses on

article-image

Bitcoin scarcity is a meme, with or without the halvings

article-image

The current state of blockchain interoperability poses an existential threat to the mainstream adoption of blockchain technology as a whole