Boost in European Crypto ETP Flows Following BlackRock's Bitcoin Fund Application

Bombolo | News and Media

European ETPs with crypto-related names have witnessed a notable increase in net inflows during June, marking their strongest month since March 2022, according to data from Morningstar. This surge in inflows follows a previous month of outflows amounting to €100 million in May. Furthermore, the trend continued with an additional €60 million of inflows in July. This trend isn't confined to Europe alone; globally, there were inflows of $610 million (€560 million) during June and July, as reported by CoinShares data.

Also Read: Bitcoin ETF Optimism Fades: Weekly Crypto Outflows Reach $55M

BlackRock's Application and Its Impact on the Market

BlackRock, the world's largest asset manager, filed an application with the US regulator in June to launch a spot bitcoin exchange traded fund (ETF). This move sparked a flurry of similar applications from other firms like Fidelity, Invesco, and WisdomTree. Unlike ETFs tracking bitcoin futures contracts, a spot ETF directly mirrors the price of bitcoin. The anticipation generated by BlackRock's application is believed to have played a pivotal role in positively affecting bitcoin ETP flows and the cryptocurrency's price.

Shift Towards Mainstream Acceptance

Hector McNeil, founder and co-CEO of HANetf, highlighted the positive impact of BlackRock's application on the crypto market. The anticipation of heightened demand due to the launch has helped push the asset class into the mainstream. This shift is significant as BlackRock, previously skeptical of cryptocurrencies, is now endorsing them. Other asset managers are likely to follow suit, contributing to further growth.

Also Read: The Ultimate Guide to BlackRock's Bitcoin ETF: Working Mechanism, Benefits, and Drawbacks

Regulatory Approval and Market Anticipation

The anticipation for regulatory approval of ETFs has reached unprecedented levels. Despite conjecture surrounding the US Securities and Exchange Commission's stance on approving BlackRock's bitcoin ETF, the community finds it puzzling that a bitcoin futures ETF has been approved while a spot ETF has not. The confidence instilled by BlackRock's announcement suggests its endorsement of bitcoin, potentially mitigating the lingering negativity around cryptocurrencies and attracting new investments.

Balancing Optimism with Realism

Despite the optimism surrounding cryptocurrencies, there are concerns about the sustainability of this sentiment. Quantitative analyst Manan Agarwal from Morningstar pointed out that similar products to BlackRock's ETF have been launched in other countries, including Canada, Brazil, and Dubai. The sustainability of the positive trend remains to be seen.

Also Read: Waiting on SEC Approval: BlackRock Bitcoin ETF Awaits Greenlight Amid Anticipated Delays

(FAQ)

1. What caused the surge in crypto ETP flows in Europe?
   The surge in inflows for European crypto-related ETPs was driven by BlackRock's application to launch a bitcoin fund in the US, which created anticipation and positive sentiment in the market.
2. How did BlackRock's application impact the price of bitcoin?
   BlackRock's application was perceived as an endorsement of bitcoin by a major asset manager, bolstering confidence and potentially attracting new investments, leading to a positive impact on the cryptocurrency's price.
3. Why is the shift of cryptocurrency into the mainstream important?
   The shift of cryptocurrency into the mainstream, especially with the backing of a large asset manager like BlackRock, signals broader acceptance and could encourage other asset managers and investors to enter the market.
4. What's the significance of a spot bitcoin ETF?
   A spot bitcoin ETF directly mirrors the price of bitcoin, offering a different investment vehicle from ETFs tracking bitcoin futures contracts. It can potentially provide more accurate exposure to the cryptocurrency's price.
5. Are there concerns about the sustainability of the positive trend in cryptocurrencies?
   Yes, some analysts caution that the positive sentiment could be temporary, citing previous launches of similar products in other countries that might not have sustained long-term growth.