Industry-Shaking Move by BlackRock
BlackRock, the largest asset manager globally, has surprised the industry with its foray into the cryptocurrency ETF competition. Eric Balchunas, Senior ETF Analyst at Bloomberg, expressed amazement at the development, stating, “I didn’t think BlackRock was even looking at this.”
On the Blockworks Macro podcast, Balchunas emphasized the significance of BlackRock’s filing, considering its dominant position in the financial market.
He explained, “BlackRock filing is just mind-blowing. They have so much going on; you think, and then Larry, I, you know, we all remember him kind of trashing crypto like five years ago. So, it made no sense to me. And so, when I saw it, I was like, ‘Oh my God.’”
Speculation and Implications
The analyst, who initially approved a mere 1% odds, noted that BlackRock’s entry quickly elevated those odds to 50%. He speculated on BlackRock’s motivations, suggesting a revenue opportunity and a chance to disrupt the crypto exchanges perceived as expensive and potentially unreliable.
He pointed out their involvement in the Federal Reserve’s market support during the 2020 COVID sell-off, suggesting that BlackRock’s “fourth branch of government” role could indicate a substantial shift in the cryptocurrency landscape.
He speculated that BlackRock sees a new opportunity in the crypto ETF market, particularly with the recent victory of Grayscale in a legal case playing a crucial role in boosting the chances of overall ETF approval. The SEC’s approach has also changed, with active engagement and feedback, breaking the pattern of radio silence observed in previous years.
BlackRock as a Potential Disruptor
Balchunas spoke about BlackRock’s history, pointing out their emphasis on ESG (Environmental, Social, and Governance) funds, which faced challenges. He suggested that BlackRock has the potential to act as a disruptor in the crypto space and that their massive distribution network and widespread trust among advisers would make them the favorite.
Hot Take
BlackRock’s unexpected entry into the cryptocurrency ETF race has the potential to reshape the entire landscape, with implications for market dynamics and investor sentiments. Whether motivated by revenue opportunities or the desire to disrupt perceived inefficiencies in existing crypto exchanges, BlackRock’s move has certainly attracted industry attention and raised the stakes for ETF approval.
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