Crypto Boom: BlackRock Emerges as a Major Beneficiary
A Shift in Perception
Just a year ago, BlackRock CEO Larry Fink was a vocal critic of bitcoin. However, his company has now become one of the biggest winners of the post-election surge in cryptocurrency enthusiasm. BlackRock’s spot bitcoin exchange-traded fund (IBIT) has seen a staggering $13 billion influx since Donald Trump’s election win on November 5.
A Record-Breaking Feat
This remarkable growth has propelled iShares Bitcoin Trust past $40 billion in assets, making it one of the top 1% of biggest ETFs in record time, according to Bloomberg Intelligence analyst Eric Balchunas. Robbie Mitchnick, BlackRock’s head of digital assets, expressed surprise at the rapid growth, stating that even the most optimistic projections didn’t anticipate such success.
A Broader Industry Trend
BlackRock is not the only company benefiting from the crypto boom. Coinbase, the largest US cryptocurrency exchange, has seen its stock rise by 58% since the election, while MicroStrategy, a software company and the largest corporate bitcoin holder, has seen its stock surge by 50%. This trend indicates that crypto is increasingly becoming a mainstream investment option, with even former skeptics like Fink embracing its potential.
From Skeptic to Believer
Fink’s transformation from a “proud skeptic” to a crypto enthusiast is a notable example of this shift. He has publicly acknowledged that his initial opinion was wrong and has since become a proponent of crypto. This change in perspective is reflected in BlackRock’s decision to launch a spot bitcoin ETF in June 2023, which was approved by the SEC in January.
A Strategic Move
BlackRock’s timing couldn’t have been better. The company’s entry into the crypto market coincided with an election year where pro-crypto congressional candidates received significant industry donations and Trump made promises to support the industry. As a result, bitcoin surged to a new all-time high above $93,000 in the week following Trump’s victory.
A Dominant Player
BlackRock’s two crypto ETFs now represent approximately 42% of the total $102 billion of value in spot crypto ETFs across the industry. According to Kaiko Research, on the Thursday after the election, spot bitcoin ETFs saw a record $1.3 billion in net assets pour in, with BlackRock reaping 85% of that total. This dominant position has put the company in a strong position to benefit from the ongoing crypto rally.
The Fear of Missing Out
As BlackRock’s iShares Bitcoin Trust crosses the $40 billion threshold, financial advisers may start to feel pressure to invest in crypto to avoid missing out on potential gains. This could lead to a “tipping point” where mainstream investors increasingly adopt crypto, driving further growth and adoption.
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