Bloomberg Analyst Highlights Significant Shift as BlackRock Joins the Crypto ETF Competition

BlackRock, the largest asset manager in the world, has surprised industry experts by entering the race to launch a cryptocurrency ETF. Eric Balchunas, Senior ETF Analyst at Bloomberg, expressed his astonishment at this development, stating, “I didn’t think BlackRock was even considering this.”
During an episode of the Blockworks Macro podcast, Balchunas emphasized the significance of BlackRock’s filing, considering its dominant position in the financial market.
He explained, “BlackRock’s filing is absolutely mind-boggling. They have so much going on; you would think, and then Larry, I mean, we all remember him criticizing crypto about five years ago. So, it didn’t make any sense to me. And when I saw it, I was like, ‘Oh my God.'”
Initially, Balchunas only gave a 1% chance of approval, but BlackRock’s entry quickly raised those odds to 50%. He speculated on BlackRock’s motivations, suggesting that it presents a revenue opportunity and a chance to disrupt the costly and potentially unreliable crypto exchanges.
Balchunas discussed BlackRock’s history, highlighting their involvement in supporting the market during the 2020 COVID sell-off on behalf of the Federal Reserve. He suggested that BlackRock’s role as a “fourth branch of government” could signify a significant shift in the cryptocurrency landscape.
The analyst further connected the dots, suggesting that BlackRock has the potential to act as a disruptive force in the crypto space. He mentioned their previous focus on ESG (Environmental, Social, and Governance) funds, which faced challenges, and proposed that BlackRock sees a new opportunity in the crypto ETF market.
The recent legal victory of Grayscale also played a crucial role in increasing the chances of overall ETF approval. Balchunas highlighted the change in the SEC’s approach, with more active engagement and feedback, diverging from the radio silence witnessed in previous years. However, he suggested that BlackRock’s entry makes them the frontrunner, given their extensive distribution network and the widespread trust they enjoy among advisers.