By Sean Allocca, in The Daily Upside, featuring Brian Spinelli, CFP®, AIF®, Co-Chief Investment Officer
The universe’s largest asset manager has a new crown.
BlackRock has surpassed Grayscale as the leading manager of on-chain capital as its lineup of exchange-traded funds — including the largest Bitcoin product on the market — continues to impress. The undisputed asset management king now has $23.3 billion on the blockchain, outpacing Grayscale’s $22.7 billion, according to data from research provider Arkham Intelligence.
BlackRock’s dominance also highlights the growing footprint of traditional firms in the digital asset industry, and signals renewed crypto confidence from some of the world’s largest money managers. “We may be seeing the beginning of a changing of the guard,” Grace Capital Management advisor Lauren Fischer told The Daily Upside. “These firms don’t want to leave money on the table.”
Black on Top
While BlackRock might be in the pole position, the original gangster of the Bitcoin game is undisputedly Grayscale. Before crypto ETFs were given the green light by regulators in January, the Stamford, Connecticut-based firm was the leading digital assets issuer, with two of the only exchange-traded products, GBTC and ETHE, on the market. After Grayscale won a lawsuit with the Securities and Exchange Commission that helped usher in Bitcoin ETF approval, that landscape turned on its head.
In the past year, GBTC lost its top spot to the much cheaper iShares Bitcoin Trust (IBIT), and it could soon become No. 3 behind the $10 billion Fidelity Wise Origin Bitcoin Fund (FBTC). The issue? In a tight price environment for asset management funds, GBTC’s expense ratio of 1.5% is the most expensive, and several times higher than products from BlackRock or Fidelity.
When GBTC was the only player in the game, those fees may have been warranted. With fees dropping to as little as 25 basis points, not so much.
Not So Farfetched Anymore. Remember when Cathie Wood projected the price of Bitcoin to skyrocket to $2.3 million if institutional investors allotted a little more than 5% of their portfolios to the cryptocurrency? Well, don’t look now.
The number of institutional investors holding bitcoin ETFs rose 14% in the second quarter, according to recent data from Bitwise Asset Management. The report, compiled from 13F filings, showed institutions locked in 21% of total bitcoin ETF assets with some $11 billion now in the hands of some of the world’s largest investors. Case in point: Goldman Sachs sunk approximately $419 million into the funds in June, locking in positions in at least seven out of the 11 products, according to filings.
“It appears to us that this is being driven by lower cost offerings, especially if investors plan to buy and hold for an extended period,” Halbert Hargrove co-chief investment officer Brian Spinelli told The Daily Upside.
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