The recent surge in Bitcoin ETF trading volume is being driven largely by crypto enthusiasts new to traditional finance, according to BlackRock’s chief investment officer for exchange-traded funds and index investments, Samara Cohen. Speaking at the Permissionless Conference in Utah, Cohen revealed that a significant portion of BlackRock’s Bitcoin ETF buyers are first-time ETF investors, highlighting a previously untapped market for these financial products.
The total market capitalization of all eleven spot Bitcoin ETFs now surpasses $63 billion, with nearly $20 billion in total inflows. The last five trading days alone witnessed net inflows exceeding $2.1 billion, with BlackRock accounting for half of that impressive figure. This surge coincides with Bitcoin reaching its highest price since July, trading above $68,300, and a 140% increase year-over-year. This growth mirrors the performance of crypto-aligned stocks, with Coinbase experiencing its best week since February, closing up approximately 24%.
Cohen attributes this success partly to BlackRock’s strategy of educating crypto investors about the advantages of exchange-traded products (ETPs). Data from 13F filings indicates that 80% of U.S. buyers of these new Bitcoin ETFs are direct investors, and a remarkable 75% of those had never previously owned an iShare, a leading ETF provider. This underscores the significant potential for bridging the gap between the crypto and traditional finance worlds.
Before the SEC’s approval of spot Bitcoin funds in January, investors primarily relied on centralized exchanges like Coinbase. However, the explosive growth of Bitcoin ETPs demonstrates a clear unmet need among digital asset investors, a need that traditional exchanges were not fully addressing. This is further supported by data from Chainalysis, which shows North America as the world’s largest crypto market, accounting for almost 23% of global trading volume, with $1.3 trillion in on-chain value received between July 2023 and July 2024. Furthermore, a16z’s State of Crypto report estimates that over 40 million Americans own cryptocurrency.
Adoption is currently driven mainly through wealth management clients requesting advisors to incorporate these new spot crypto products into their portfolios. Cohen sees a fascinating parallel between ETFs and blockchain technology, suggesting both act as decentralizing forces, increasing access, transparency, and accelerating growth. She points to the publication of the Bitcoin whitepaper in 2008, coinciding with the G20’s discussions on improving financial transparency following the global financial crisis, as a significant historical marker. BlackRock’s approach of utilizing counterparty clearing and multilateral trading, strategies that fueled ETF growth in traditional finance, has minimized risk and contributed to the success of their Bitcoin ETF. Ultimately, Cohen views the current situation as a win for investors, effectively merging two ecosystems with shared goals.
