The ETF chief of BlackRock reveals that 75% of its bitcoin buyers are newcomers to the crypto market.

• Over the past five trading days, spot bitcoin ETFs have experienced more than $2.1 billion in net inflows, with BlackRock contributing half of those sales.
• BlackRock's chief investment officer of ETFs and index investments states that 75% of the 80% of direct investors purchasing IBIT had no prior ownership of iShares.

A year ago, Samara Cohen and her team at BlackRock launched one of the first-ever spot bitcoin exchange-traded products in the U.S., believing there was pent-up demand. Now, investors are flocking in, and many of them are crypto enthusiasts who are new to Wall Street.

Cohen, the chief investment officer of BlackRock's exchange-traded funds and index investments, stated on CNBC that the demand for bitcoin was for an ETF wrapper. She made this statement at the Permissionless Conference in Utah.

The total market cap of all eleven spot bitcoin ETFs has surpassed $63 billion, with total flows of nearly $20 billion. In the last five trading days, spot bitcoin ETFs have experienced net inflows of over $2.1 billion, with BlackRock accounting for half of those sales.

The surge in trading volume is due to bitcoin reaching its highest price since July, surpassing $68,300. Bitcoin has experienced a 140% increase in value from the same quarter last year, outperforming the S&P 500. Additionally, spot token funds and the crypto market cap have also increased in tandem. Crypto-aligned stocks have also experienced a 24% rise this week, marking their best performance since February.

Cohen revealed to CNBC that one aspect of drawing clients to its funds involves educating crypto investors on the advantages of exchange-traded products (ETPs).

Large investors in the U.S. are direct buyers of new spot bitcoin products, according to 13F filings. Of these direct investors, 75% have never owned an iShare before, as stated by Cohen on CNBC.

"Cohen stated that the expectation was to educate ETF investors on crypto, particularly bitcoin, but it was discovered that a lot of education on the benefits of the ETP wrapper had been provided to crypto investors."

After the U.S. Securities and Exchange Commission approved spot bitcoin funds in January, investors had limited options for buying and storing cryptocurrencies. Centralized exchanges like Coinbase were among the most accessible choices for U.S. investors. However, the successful launch of bitcoin ETPs has exposed to Cohen and other Wall Street professionals that crypto exchanges were not providing digital asset investors with everything they required.

The largest crypto market globally is North America, which accounts for nearly 23% of all crypto trading volume, according to new data from Chainalysis. The blockchain analytics platform estimates that between July 2023 and July 2024, there was $1.3 trillion in on-chain value received.

According to a16z's recently published State of Crypto report, over 40 million Americans own cryptocurrency.

Mostly, wealth management clients have requested advisors to include new spot crypto products in their portfolios through adoption.

In August, Morgan Stanley became the first big bank to enable its 15,000 financial advisors to pitch bitcoin ETFs from BlackRock and Fidelity to clients with a net worth over $1.5 million. Unlike other firms, Morgan Stanley did not perform in-house due diligence before allowing its financial advisors to actively pitch the funds.

"Jan van Eck, CEO of Wealth manager allocators, stated in an interview with CNBC in Utah that they have not been allocating effectively. "In reality, they're barely getting started," he said."

In Europe, the company has 12 token-based products trading.

"As seen in Europe, only a few private banks have approved significant investment in bitcoin or anything else," Van Eck stated. He added that his company has approximately $2 billion in its European crypto ETPs, with a significant portion of the volume coming from individual investors.

Before Wall Street feels more comfortable with crypto, lawmakers on Capitol Hill need to establish rules.

ETFs create transparency

ETFs and blockchain technology, according to Cohen, address similar issues in many ways.

Cohen stated that ETFs have played a significant role in TradFi markets by increasing access, transparency, and growth, particularly during the post-crisis period of 2008 and 2009.

Cohen stated, "It is highly significant that the bitcoin whitepaper was released on October 31, 2008, and then the G20 leaders from various countries gathered to discuss the aftermath of the financial crisis and ways to increase transparency through public reporting."

In TradFi markets, ETFs experienced significant growth due to BlackRock's risk management strategies involving counterparty clearing and multilateral trading.

"Over the past 15 years, DeFi has become a reality," she stated.

"Was this a victory for Bitcoin and ETPs? In my opinion, it was a win for investors as long as we can successfully integrate these ecosystems that aim to achieve the same objectives."