In Salt Lake City, Samara Cohen, who serves as the Chief Investment Officer for exchange-traded funds and index investments at BlackRock, acknowledged a significant demand for Bitcoin that led her team to introduce one of the first spot Bitcoin exchange-traded products in the United States. According to Cohen, investors are now flocking to these products, including many crypto enthusiasts new to Wall Street. She emphasized that BlackRock recognized the investor demand for a more accessible way to engage with Bitcoin, specifically through an ETF structure. This insight was shared during a CNBC interview at the Permissionless Conference in Utah.
As of now, the total market capitalization for the eleven spot Bitcoin ETFs exceeds $63 billion, with nearly $20 billion in total flows. Recently, these ETFs experienced over $2.1 billion in net inflows in five trading days, with BlackRock contributing to half of these sales. This surge coincides with Bitcoin reaching its highest trading levels since July, surpassing $68,300. Over the third quarter, Bitcoin’s growth outpaced the S&P 500, with an increase of approximately 140% from the previous year. During this period, crypto-aligned stock Coinbase also saw a substantial rise, ending the week up by about 24%.
Cohen highlighted that part of their strategy involved educating crypto investors on the benefits of exchange-traded products (ETPs). Analysis of 13F filings, which indicate equity positions from significant investors, revealed that 80% of buyers of these spot Bitcoin products are direct investors. Among those, 75% had not previously owned an iShare, one of the prominent ETF providers globally. This led to extensive educational efforts to acquaint these crypto investors with the advantages of ETPs.
Prior to the U.S. Securities and Exchange Commission’s approval of spot Bitcoin funds in January, investors had limited options for buying and holding cryptocurrencies, with platforms like Coinbase being among the most user-friendly. However, the debut of Bitcoin ETPs suggested to Cohen and Wall Street professionals that crypto exchanges might not fulfill all the needs of digital asset investors.
In the broader digital asset market, the U.S. plays a significant role. According to Chainalysis, North America maintains the largest share of the crypto market, comprising nearly 23% of global trading volume. The blockchain analytics platform estimated that on-chain value received in the region from July 2023 to July 2024 reached $1.3 trillion. Moreover, a report by venture firm a16z found that over 40 million Americans currently own cryptocurrencies.
Most adoption arises from wealth management clients requesting financial advisors to incorporate new spot crypto products into their portfolios. In August, Morgan Stanley became the first major bank to allow its advisors to offer Bitcoin ETFs from BlackRock and Fidelity to clients with net worths exceeding $1.5 million. Other firms are still conducting due diligence before permitting their advisors to pitch the funds actively.
VanEck CEO Jan van Eck, speaking from Utah, noted that wealth management allocators had been slow to act, drawing comparisons with the European market, where VanEck has twelve token-based products in circulation. In Europe, significant private banks have yet to invest in Bitcoin or Ethereum substantially, although individual investors contribute to a large part of the volume in the company’s $2 billion European crypto ETPs.
Cohen believes that ETFs and blockchain technologies address similar needs, offering access and transparency. She also pointed out that these forces have grown considerably since the financial crisis of 2008-2009. By employing counterparty clearing and multilateral trading, BlackRock minimized risk and created substantial opportunities for ETFs within traditional finance markets. Cohen posits that the ongoing integration of DeFi and legacy systems is advantageous for investors, as both ecosystems work towards similar objectives.
