BlackRock Sees Low Demand for Other Cryptos Other Than Bitcoin and Ethereum

At the Bitcoin2024 conference, Robert Mitchnick, BlackRock’s head of digital assets, highlighted the firm's focus on Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs), citing very limited client interest in other cryptocurrencies.

Mitchnick, in an interview with Bloomberg Intelligence ETF analyst James Seyffart, explained:

“I don't think we're going to see a long list of crypto ETFs. Bitcoin represents about 55% of the market cap, and ETH is at 18%. The next plausible investible asset is at, like, 3%. It’s just not close to being at that threshold of maturity, liquidity, et cetera.”

This clear preference aligns with BlackRock's strategy to cater to its clients' predominant interests. Despite the emergence of new cryptocurrencies, Bitcoin and Ethereum remain the primary focus due to their established track record and significant market presence.

Bitcoin and Ethereum: Complements, Not Competitors

Mitchnick emphasized that most of BlackRock’s clients view BTC and ETH as complementary assets rather than competitors. 

“The whole store of value use case within crypto is pretty definitively territory that Bitcoin owns,” Mitchnick said. “ETH is trying to do a bunch of different applications that for the most part, Bitcoin is not trying to do. So, really, they're more complements than they are competitors or substitutes.”

Mitchnick predicts that investors will eventually allocate around 20% of their crypto holdings to ETH, with the remainder going to BTC. This distribution reflects the unique roles each cryptocurrency plays within the broader market. 

Bitcoin ETFs have already proven to be a significant success, with BlackRock’s IBIT trust ranking as the second-best performing ETF this year, trailing only behind a fund that tracks the S&P 500.

Despite this success, Ethereum spot ETFs have seen net outflows, highlighting the cautious approach investors are taking with ETH. On July 25, Ethereum spot ETFs saw $152.3 million in net outflows, with Grayscale's ETHE alone contributing $346.22 million in net outflows on July 24. In contrast, Bitcoin spot ETFs saw $31.16 million in net inflows on the same day.

While BlackRock remains focused on Bitcoin and Ethereum, other firms like Franklin Templeton are exploring a broader range of cryptocurrencies. Franklin Templeton, which also issues BTC and ETH ETFs, has expressed optimism about expanding its crypto ETF offerings, including a product for Solana (SOL).