By
Chimamanda U. Martha
April 26th, 2024
BlackRock’s existing spot BTC ETF stands out as the top-performing option in the market, contributing to the surge in demand for Bitcoin ETFs.
BlackRock Inc (NYSE: BLK), the world’s leading asset manager, has taken a bold step by filing an application to the US Securities and Exchange Commission (SEC) for approval to incorporate spot Bitcoin Exchange Traded Funds (ETFs) into its “Global Allocation Fund”.
BlackRock’s Strategic Initiative
The filing submitted by BlackRock outlines the intention to acquire shares in Exchange-Traded Products (ETPs) that track the performance of Bitcoin, including those sponsored by affiliated entities. However, it’s worth noting that the investments will be limited to Bitcoin ETPs listed and traded on recognized national securities exchanges, ensuring regulatory compliance and oversight.
The Global Allocation Fund, managed by BlackRock, boasts $17.8 billion in Assets Under Management (AUM) and has delivered a 4.61% year-to-date return as of March 7. With a mandate to provide investors with global diversification across various asset classes such as equities, bonds, and potentially cryptocurrencies, the fund aims to seize promising investment opportunities while mitigating risks and aiming for long-term capital growth and income.
The decision by BlackRock to include Bitcoin ETFs in its fund portfolio has drawn attention from crypto analysts and market observers. MacroScope, a notable commentator, highlighted the relevance of BlackRock’s move, anticipating similar actions from other Wall Street firms in the coming months.
BlackRock’s interest in Bitcoin ETFs extends beyond its Global Allocation Fund. The firm recently approached the SEC with a proposal to increase Bitcoin ETF investments for its Strategic Income Opportunities Fund, a fund with an AUM of $36.7 billion.
However, SEC clearance is still pending on this request, implying that the investments’ future is dependent on regulatory approval. Despite the fund’s underperformance this year, with a modest 0.59% gain year-to-date, the move signals BlackRock’s strategy to incorporate Bitcoin investments across its fund portfolios.
BlackRock’s Bitcoin ETF Performance and Regulatory Hurdles
Notably, BlackRock’s existing spot BTC ETF stands out as the top-performing option in the market, contributing to the surge in demand for Bitcoin ETFs. The past week witnessed record-breaking performances for Bitcoin ETFs, coinciding with Bitcoin’s continued rally, hovering around $68,000.
As of the time of writing, Bitcoin is trading at approximately $67,357, reflecting a 1.04% increase in the past 24 hours, with a market capitalization surpassing $1.3 trillion.
However, despite the growing momentum, regulatory hurdles persist. According to a recent filing, the SEC has delayed its decision on BlackRock’s spot Bitcoin ETF options trading application until April 24, citing the need for additional time to evaluate the proposed rule change.
Furthermore, the SEC has also deferred decisions on whether to allow options trading on spot Bitcoin ETFs proposed by other entities such as Cboe Exchange, Inc. and Miax Pearl LLC, setting a similar deadline of April 24. These developments highlight the complexity and regulatory uncertainties surrounding the integration of Bitcoin and other cryptocurrencies into traditional financial markets.
