BlackRock’s Bitcoin exchange-traded fund (ETF) has gained significant momentum, largely driven by direct client demand, according to Robert Mitchnick, BlackRock’s head of digital assets. Mitchnick discussed the ETF’s growth at the Bitcoin2024 event during an interview with Bloomberg journalist James Seyffart.
Client Demand and Institutional Shift
Mitchnick emphasized that the creation of the Bitcoin ETF was primarily fueled by direct client interest. Since its launch, the fund has begun to find its client base, marking a significant shift in the investment landscape. BlackRock CEO Larry Fink, initially a skeptic of cryptocurrency, played a crucial role in this transition. Mitchnick credited Fink for dedicating time to study digital assets, ultimately leading him to embrace Bitcoin as “digital gold.”
Financial History and Technological Insights
Mitchnick noted that understanding Bitcoin comes naturally to those who study financial history, geopolitics, or technology—areas in which Fink is well-versed. The broader acceptance of Bitcoin and other digital assets, despite regulatory uncertainties, underscores their permanence as an asset class. Mitchnick stated that the institutional-grade infrastructure and rising client demand were key factors pushing BlackRock towards launching the Bitcoin ETF.
ETF Performance and Future Prospects
James Seyffart highlighted that Bitcoin ETFs have had some of the most successful launches in history. He estimated that 20-25% of BlackRock’s revenue flow this year has come from the iShares Bitcoin Trust (IBIT), making it the company’s second most successful offering after the S&P 500 ETF.
Initially, direct investors drove the demand for the ETF, but BlackRock’s wealth advisory and institutional investors are gradually building momentum. Mitchnick pointed out that platforms like Morgan Stanley, UBS, and Merrill Lynch have yet to offer Bitcoin ETFs on a solicited basis, meaning they currently provide the ETFs only upon client request. “Typically, it takes multiple years for a new ETF to get to that solicited status,” Mitchnick explained, though he noted that many large platforms are accelerating efforts to offer these ETFs more proactively.
Adoption and Allocation
Mitchnick estimated that BlackRock Registered Independent Advisers who have adopted the ETFs are allocating 2-3% of their funds to them. He acknowledged that institutions move slowly due to the need for thorough research and due diligence on new assets. However, he anticipated that the situation might begin to change within the year as more platforms start offering Bitcoin ETFs more widely.
