Jay Jacobs, Head of Thematic and Active ETFs at BlackRock, emphasized Bitcoin’s potential as a hedge against geopolitical uncertainty and monetary risk in the first edition of BlackRock’s Quick Download series. Jacobs noted the burgeoning digital assets industry and the popularity of BlackRock’s IBIT ETF since its launch.
Bitcoin: A Nascent and Volatile Asset
Jacobs described Bitcoin as a nascent asset, noting its size is only one-tenth that of the gold market. “Therefore, it has high volatility and behaves a bit differently than stocks and bonds. A lot of investors look at it as a potential hedge against geopolitical and monetary risks. Other investors look at it as a way to play future adoption of blockchain technology. In either case, investors must take a measured approach to Bitcoin, considering both the risks and the potential returns of the asset,” he said.
BlackRock’s Bitcoin ETF Success
Since the launch of Spot Bitcoin ETFs in January 2024, Bitcoin’s price has surged to new all-time highs. In March, it reached a peak of $73,000. BlackRock’s Bitcoin ETF has been the most profitable, recently surpassing Grayscale’s Bitcoin ETF in inflows by the last week of May. This was a significant milestone, given Grayscale had converted its long-standing Bitcoin trust from the OTC market.
Also Read: Bitcoin ETFs Significant Inflows for BlackRock and Fidelity in 2024
Dominance in the Crypto ETF Market
Crypto-based ETFs have become a focal point in the finance sector. Bitcoin ETFs saw approval in January, followed by Ethereum in May, although Ethereum ETFs have yet to go live. Despite the initial hype, inflows for Spot Bitcoin ETFs have begun to slow, leading to a price drop back to the low $61,000 range.
Market Dynamics and Future Prospects
BlackRock’s promotion of Bitcoin and its IBIT ETF comes at a time when inflows are decreasing. However, interest in digital assets as future financial instruments remains strong. Many investors view Bitcoin and digital assets as the future of everyday finance, thus maintaining interest in these ETFs. BlackRock expects this interest to grow, particularly as new alternatives to traditional currencies and investment options gain popularity.
