BlackRock, the world’s largest asset manager, has astonished industry experts with its entry into the cryptocurrency ETF race. Eric Balchunas, Senior ETF Analyst at Bloomberg, expressed his disbelief at the development, stating, “I didn’t think BlackRock was even looking at this.”
On the Blockworks Macro podcast, Balchunas highlighted the importance 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.’”
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.
Balchunas spoke about BlackRock’s history, pointing out their involvement in the Federal Reserve’s market support during the 2020 COVID sell-off. He suggested that BlackRock’s “fourth branch of government” role could indicate a substantial shift in the cryptocurrency landscape.
The analyst further connected the dots, saying that BlackRock has the potential to act as a disruptor in the crypto space. He discussed their previous emphasis on ESG (Environmental, Social, and Governance) funds, which faced challenges, and suggested that BlackRock sees a new opportunity in the crypto ETF market.
The recent victory of Grayscale in a legal case also played a crucial role in boosting the chances of overall ETF approval. Balchunas highlighted the change in the SEC’s approach, with active engagement and feedback, breaking the pattern of radio silence observed in previous years. However, he suggested that BlackRock’s entry makes them the favorite, given their massive distribution network and widespread trust among advisers.