Opinion: Why BlackRock filing for a Bitcoin ETF is major news

Written by Mel Gelderman

Posted on June 22nd, 2023

BlackRock has filed for a spot Bitcoin ETF, and token fans are excited about it. Mel Gelderman explains why.

Bear markets can be difficult, but token enthusiasts had a few reasons to celebrate last week. Sotheby’s auctioned off a “grail” NFT by Dmitri Cherniak for $5.4 million and we got a series of positive Layer 2 scaling announcements, but the biggest story by far involves BlackRock. CoinDesk reported on Thursday that the world’s largest asset manager was preparing to file for a spot Bitcoin ETF, and the news was confirmed a few hours later. BlackRock’s iShares division is handling the application as the asset management giant appears to make a jump into crypto. This is major news.

BlackRock makes a Bitcoin play 💪

If BlackRock’s application is successful, it would be the first time spot Bitcoin is available through an exchange-traded fund, potentially opening the floodgates to a wave of mainstream adoption. ETFs are popular instruments for institutional investors and pensions to allocate capital. If BlackRock can offer these groups a way to get exposure to the world’s biggest crypto token through an ETF, it would help more people access the asset class and show that the space is maturing. That could lead to interest in Ethereum and other tokens.

It’s worth mentioning BlackRock’s standing in the financial sector here. With $10 trillion in assets under management, it’s the titan of titans in the investment world. Some say that BlackRock has a higher chance of getting an approval where others have failed. The SEC memorably approved the first futures-based ETF for Bitcoin in October 2021, but it’s repeatedly knocked back other firms from registering an ETF that lets people buy Bitcoin at its spot price. One interesting theory that’s emerged suggests that BlackRock is aware that the application could be unsuccessful, but is simply making the filing as a political stand against the SEC’s crypto clampdown. BlackRock chief Larry Fink is a prominent Democrat supporter and the SEC has been on a warpath this year. 

Cautious optimism 🙏

I should also point out how the futures ETF went down. It was a popular view that an approval would help Bitcoin’s price, but it actually marked the peak of that year’s bull cycle. By November 2022, it was 80% down from its peak. We’ve also heard before about the promise of institutional adoption thanks to the likes of MicroStrategy, Ruffer, and Grayscale, but that narrative lost steam once the market trended down.

So you could say I’m cautiously optimistic. Will BlackRock get approved? Maybe. And will it be a positive for Bitcoin and the rest of the token space if it does? Undoubtedly. I don’t think Bitcoin will tame its volatility anytime soon, though. 

Please note: Investing in cryptoassets is risky. Due to the volatile nature of the cryptocurrency market, investors run the risk of losing their funds when they make an investment. Returns from cryptoasset investing are not guaranteed, therefore users should always be aware of the risks.