A year ago, Samara Cohen decided there was too much pent-up demand for Bitcoin, so she and her team at BlackRock launched one of the first-ever spot Bitcoin exchange-traded products in the United States. Now, investors are flocking to the market, many of them crypto enthusiasts on Wall Street.
Cohen, who is BlackRock's chief investment officer for exchange-traded funds (ETFs) and index investing, said BlackRock now believes there is market demand for a better way to acquire Bitcoin "that is wrapped in ETFs."
Currently, the total market capitalization of all 11 spot Bitcoin ETFs exceeds $63 billion, with total flows approaching $20 billion. In the past five trading days alone, net inflows into spot Bitcoin ETFs have exceeded $2.1 billion, with BlackRock accounting for half of that.
The surge in Bitcoin trading volume comes as Bitcoin hit its highest level since July this week, trading above $68,300. At the end of the third quarter, Bitcoin prices were up about 140% from the same period last year, outperforming the S&P 500 Index, as these spot token funds and crypto market caps rose in tandem. Cryptocurrency-related stock Coinbase ended the week up about 24%, its best week since February this year.
Cohen said part of the strategy to attract clients to his fund is to introduce crypto investors to the benefits of exchange-traded products (ETPs).
The 13F filing shows that in the United States, 80% of buyers of these new Bitcoin spot products are direct investors. The filing provides quarterly data on stock positions held by large investors. Cohen said that of the 80% of direct investors, 75% had never held iShare before, one of the best-known and largest ETF providers in the world.
“So we started this journey with the expectation that we would need to educate ETF investors about cryptocurrencies, specifically Bitcoin,” Cohen said. “As it turns out, we’ve already done a lot to educate crypto investors on the benefits of ETP wrappers.”
Before the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot fund in January of this year, investors had several ways to purchase and custody the cryptocurrency. Centralized exchanges like Coinbase are one of the most investor-friendly options in the United States. But the blockbuster debut of the Bitcoin ETP made it clear to Cohen and others on Wall Street that cryptocurrency exchanges don’t offer digital asset investors everything they need.