NASHVILLE, TENNESSEE

Robert Mitchnick, the head of digital assets at BlackRock, stated that while spot Ethereum ETFs have launched, it’s unlikely for funds tracking other cryptocurrencies like Solana or Polygon to follow.

“I don’t think we’re going to see a long list of crypto ETFs,” Mitchnick shared with Bloomberg Intelligence ETF analyst, James Seyffart. “Bitcoin currently houses about 55% of the market cap, while Ethereum holds 18%. The next viable asset is at roughly 3%, indicating a lack of enough maturity and liquidity.”

Nonetheless, crypto as an asset class is “not going away,” indicating future prospects for firms like BlackRock. Competitors like VanEck have begun filing for ETFs involving assets like Solana, although expert opinions suggest they face long odds for approval.

Spot ETH ETFs have captured about 20% to 25% of capital compared to the success of existing spot Bitcoin ETFs. BlackRock’s IBIT trust, for instance, has become the second-best performing ETF this year, right behind an S&P 500 fund, making up over 20% of BlackRock’s flows with minimal negative flow days.

Mitchnick explained, “We don’t view Bitcoin and ETH as competitors; Bitcoin aims to serve as a global monetary alternative, while Ethereum functions as a platform for innovative applications. They complement each other.”

Although regulatory clarity remains lacking, the SEC is unlikely to endorse spot Ethereum ETFs with staking features. BlackRock revived interest in Bitcoin ETFs with its June 2023 filing, which included measures to mitigate market manipulation and surveillance risks.

Bitcoin’s Value Proposition

Typically, BlackRock’s IBIT trust investors allocate 2% to 3% of their portfolio to Bitcoin. Bitcoin distinguishes itself from traditional assets, presenting a unique value many clients are just starting to recognize.

Mitchnick, known for enlightening BlackRock CEO Larry Fink about Bitcoin, sees growing interest from wealth advisors and institutions, currently a minority in IBIT investment. “It’s still early days.”

“There’s a shift in viewing Bitcoin as a potential safety asset,” Mitchnick said, countering notions of Bitcoin as merely a “risk asset.” He emphasized that the uncertainties surrounding Bitcoin differ significantly from threats prevalent in traditional finance regarding geopolitical events, inflation, and currency issues.