As InvestorPlace reported yesterday, there’s a key development in the world of crypto that’s shaking up expectations. Bitcoin (BTC) investors appear to be intrigued by the potential for a new BlackRock (NYSE:BLK) BTC exchange-traded fund (ETF). Given BlackRock’s status as an innovative force in the world of ETFs (and a trusted partner of many institutional investors), this rollout could turn out to be a big deal for the entire sector.
That’s largely because where the price of BTC goes, most other cryptos follow. The leading bellwether for this sector, Bitcoin remains the focal point of most investors watching the world of digital assets. In fact, for institutional investors, BTC is among the few asset classes that may be owned, given the ongoing regulatory overhang this space is facing. Thus far, Bitcoin has not been named as a security, thus exempting investors from potential headaches down the road.
Bitcoin’s outperformance this year, relative to many of its peers, has been noticeable. Accordingly, perhaps now is a great time for fund managers to jump into the game once again.
Let’s dive into what a BlackRock Bitcoin ETF would mean for investors moving forward.
Could a BlackRock Bitcoin ETF Be What This Sector Needs to Rally?
Interestingly, many experts in the world of crypto seem to think that a BlackRock Bitcoin ETF is exactly what the doctor ordered for the crypto sector. Some have gone so far as to suggest that such an ETF could spur a potential “$15 trillion crypto boom.” That’s a headline that will certainly grab investors’ attention.
I’m not so sure such a boom may be around the corner. After all, inflation remains stubbornly high, as do interest rates. In such an environment, it’s hard to foresee such an ultra-bullish thesis play out.
That said, I will grant that an institutional investor-focused Bitcoin ETF could spur significant capital inflows into the sector. The filing for a spot ETF (rather than the ETFs that are currently available, which are tied to futures) could have a material impact on day-to-day price movements for BTC. Thus, for those holding on for dear life, such an ETF could spur the kind of positive buying pressure that leads to another 2021-like rally. Or, at least that’s the hope.
We’ll see if regulators approve such an ETF, considering that similar funds have not been approved in the past. If BlackRock’s ETF gets approved, the company’s massive market share in the world of money management could create a unique set of circumstances for Bitcoin and this asset class. Personally, I’m on the edge of my seat with this one.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
