BlackRock’s Bitcoin ETF Picks Up Momentum As Client Demand Grows

Bloomberg journalist James Seyffart recently interviewed BlackRock’s head of digital assets, Robert Mitchnick, spotlighting the rapid rise of Bitcoin exchange-traded funds (ETFs). 

Robert Mitchnick revealed that direct client demand has been the primary catalyst behind this momentum.

Mitchnick detailed how the firm’s Bitcoin ETF journey has unfolded, emphasizing the significant role of client interest in driving this growth.

Surge in Bitcoin ETF Demand

BlackRock’s journey into Bitcoin ETFs is a story of transformation and adaptation. When Robert Mitchnick joined BlackRock in 2018, the company’s CEO, Larry Fink, was known for his skepticism toward crypto assets.

However, over time, Fink’s perspective underwent a significant shift. Recently, he referred to Bitcoin as “digital gold,” a stark contrast to his earlier stance.

Mitchnick credited this change to Fink’s deep dive into understanding Bitcoin’s potential. He highlighted Fink’s background in geopolitics, financial history, and technology as key factors in his newfound appreciation for the digital asset.

While internal shifts at BlackRock played a role, Mitchnick believes that the larger forces of client demand were the true drivers behind the Bitcoin ETF launch. They were also functional in the success of the funds post-launch.

Moreover, the infrastructure supporting crypto as an asset class had reached an institutional-grade level despite the uncertainties surrounding regulatory clarity.

This robustness, with a clear and growing client demand, created the perfect storm for BlackRock to introduce its Bitcoin ETF. Further, James Seyffart highlighted that Bitcoin ETFs have been among the most successful ETF launches in history.

The iShares Bitcoin Trust (IBIT) has significantly contributed to BlackRock’s revenue stream, with Seyffart estimating that it accounts for 20-25% of the firm’s revenue flow this year. This makes IBIT BlackRock’s second most successful offering.

The Journey Ahead

Mitchnick further explained that BlackRock’s institutional investors and wealth advisory are still growing momentum. Unlike other platforms that have not started their ETF journey, this progress is better than nothing.

Notably, major wealth advisory platforms like UBS, Morgan Stanley, and Merrill Lynch have not yet begun offering Bitcoin ETFs on a solicited basis.

This means that these platforms only provide Bitcoin ETFs at the explicit request of clients.

Mitchnick elaborated, stating that new ETFs could take several years to achieve the solicited position. However, most platforms are doing just enough to make the process faster.

Mitchnick is optimistic that this trend might start to shift this year. This could occur considering the interest of adopters in BlackRock Registered Independent Advisers. 

This set of individuals has already allocated 2-3% of their funds to BTC ETFs, and there’s more to expect.

According to Mitchnick, institutional investors move cautiously and perform due diligence and thorough research in such cases. So, this slow but steady adoption of Bitcoin ETFs represents the movement of large entities when considering new assets. 

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