Crypto Craze: Investors Flock to Bitcoin ETFs
The world of cryptocurrency is abuzz with excitement as investors clamor to get in on the action. Just a year ago, Samara Cohen, Chief Investment Officer at BlackRock, launched one of the first spot bitcoin exchange-traded products in the US. Today, the total market cap of these ETFs has skyrocketed to over $63 billion, with net inflows of more than $2.1 billion in just the last five trading days.
A New Wave of Investors
Cohen attributes the surge in popularity to the appeal of the ETF wrapper, which offers a more accessible way for investors to tap into the crypto market. Interestingly, 80% of buyers are direct investors, with 75% having never owned an iShare before. This suggests that crypto enthusiasts are driving the demand, and BlackRock’s education efforts have paid off in teaching them about the benefits of exchange-traded products.
The Rise of Bitcoin
Bitcoin’s value has soared, reaching its highest level since July at over $68,300. The cryptocurrency ended the third quarter up 140% from the same period last year, outpacing the S&P 500. Crypto-aligned stocks like Coinbase have also seen a significant boost, with a 24% increase in value this week.
A Growing Market
North America remains the largest crypto market globally, accounting for nearly 23% of all crypto trading volume. According to Chainalysis, between July 2023 and July 2024, there was $1.3 trillion in on-chain value received. Venture firm a16z reports that over 40 million Americans now hold crypto, with adoption largely driven by wealth management clients requesting new spot crypto products.
Wall Street Takes Notice
Morgan Stanley has become the first big bank to allow its financial advisors to pitch bitcoin ETFs to clients with a net worth over $1.5 million. Other firms are following suit, although they’re taking a more cautious approach. VanEck CEO Jan van Eck notes that private banks have been slow to approve investment in bitcoin or ethereum, but individual investors are driving volume in European crypto ETPs.
The Future of Crypto
Cohen believes that ETFs and blockchain technology are solving similar problems, such as increasing access and transparency. She draws parallels between the growth of ETFs in traditional finance markets and the rise of decentralized finance (DeFi). As lawmakers provide clearer guidelines, Wall Street is likely to become even more comfortable with crypto. The question is, what’s next for this burgeoning market?
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