Expanding Bitcoin ETF: BlackRock Exceeds Expectations

For BlackRock, bitcoin and crypto ETFs are serious business. The finance giant does not hide its enthusiasm for these new investment products, and its clients are following suit. After a decade of refusals, the SEC finally approved Bitcoin ETFs in January, paving the way for a massive influx of capital. These exchange-traded funds (ETFs) are garnering growing interest, even surpassing the most optimistic forecasts. But what about the performance of these crypto products and other digital assets?

Bitcoin: The Rising Star of ETFs

The Bitcoin ETFs have stormed the market, relegating other new financial products to the realm of anecdotes. Among the 575 ETFs launched this year, 14 of the top 30 are dedicated to Bitcoin or Ethereum, with the top four spots occupied by Bitcoin funds.

An impressive performance, especially considering that BlackRock’s iShares Bitcoin Trust has dominated the ETF market in terms of inflows for the past four years.

575 ETFs have now launched in 2024…

*14 of top 30* by inflows are either spot btc or eth ETFs.

Includes 6 of top 10.

There are also 2 MSTR-related ETFs in top 30.

Crypto appetite from tradfi is real. pic.twitter.com/DmD6f5zJ1P

— Nate Geraci (@NateGeraci) October 23, 2024

The numbers speak for themselves:

• In just 10 months, Bitcoin ETFs have surpassed the $20 billion inflow mark, a new record that gold ETFs took five years to achieve;
• Ten bitcoin funds have been approved since January, allowing investors easier access to this digital asset;
• Bitcoin ETFs occupy the top spots in new launches, demonstrating massive demand.

According to James Seyffart, an analyst at Bloomberg Intelligence, this explosive growth is partly due to latent demand. “Investors were waiting for a safe and accessible solution to bet on bitcoin“, he explains.

Traditional financial institutions, such as Morgan Stanley and Goldman Sachs, have also crossed the threshold, attracting even more capital towards these new products.

Crypto Products: A Promising Future Despite Challenges

While bitcoin enjoys roaring success, Ethereum ETFs are still struggling to keep pace. Although the SEC approved ETFs for the second-largest cryptocurrency in May, the inflows have not materialized. The Grayscale Ethereum Trust (ETHE), a historical player, has undergone a series of massive outflows, with over $3 billion withdrawn from the fund.

As a result, the nine Ethereum ETFs show a negative balance of $472.7 million since their launch.

But all is not lost. The conversion of the Grayscale Ethereum Trust into an ETF could mark a turning point, and other products continue to generate investor interest. Hedge funds, for example, are taking a strategic approach by investing in ETFs while hedging their positions with futures contracts.

Observers note, however, that the challenges for Ethereum are far from over. “For now, outflows from the Grayscale Ethereum Trust eclipse inflows to other Ethereum ETFs“, notes Seyffart.

The situation could change rapidly if interest in crypto products continues to grow.

After an encouraging “Uptober” and amid declining interest rates from central banks, ETFs could play a crucial role in propelling the crypto market by the end of the year.