The driving force behind the creation of Bitcoin exchange-traded funds (ETFs) is client demand, according to Robert Mitchnick, head of digital assets at BlackRock. Speaking at the Bitcoin 2024 event in Nashville, Mitchnick noted that these funds are just beginning to gain momentum. “It’s early,” he explained to Bloomberg journalist James Seyffart.
BlackRock CEO Larry Fink, who was initially a skeptic of cryptocurrency when Mitchnick was hired in 2018, has since shifted his stance, recently referring to Bitcoin as “digital gold.”
Mitchnick credited Fink’s transformation to his thorough study of the space, acknowledging Fink’s financial and geopolitical expertise. Mitchnick emphasized that larger forces, including the institutional-grade infrastructure and the undeniable presence of crypto as an asset class and technology, played a role. The final push, he said, came from client demand.
The Rise of Crypto ETFs
Bitcoin ETFs have made a significant impact, with Seyffart highlighting their success as some of the most successful ETF launches in history. He estimated that the iShares Bitcoin Trust (IBIT) has contributed to 20-25% of BlackRock’s revenue flow this year, making it the firm’s second most successful offering after the S&P 500 ETF.
Mitchnick explained that the initial demand for the ETF came from direct investors, while BlackRock’s wealth advisory and institutional investors are still in the early stages of adoption. He noted that major wealth advisory platforms like Morgan Stanley, UBS, and Merrill Lynch have yet to offer Bitcoin ETFs on a solicited basis, a process that typically takes several years. However, Mitchnick believes that this year may see an acceleration in this trend. He estimated that BlackRock Registered Independent Advisers allocating funds to Bitcoin ETFs are currently allocating around 2-3%.
Robert Mitchnick on stage with James Seyffart. Source: X
Limited Interest Beyond Bitcoin and Ethereum
At the Bitcoin 2024 conference, Mitchnick stated that BlackRock sees “very little interest” among clients in cryptocurrencies beyond Bitcoin (BTC) and Ethereum (ETH). He does not foresee a proliferation of crypto ETFs outside these two core assets. According to Mitchnick, client interest remains predominantly in Bitcoin, with some interest in Ethereum.
VanEck’s Bold Prediction – The $2.9 Million Bitcoin
In a related development, investment manager VanEck released a report predicting that Bitcoin could potentially reach a total market capitalization of $61 trillion, or approximately $2.9 million per coin, by 2050. This projection is based on the anticipated massive demand for Bitcoin as collateral for trade settlement and as a reserve asset for central banks.
The report suggests that Bitcoin could be used to settle 10% of global international trade and 5% of domestic trade by 2050, leading to central banks holding 2.5% of their assets in BTC. VanEck also projected that Bitcoin Layer-2 (L2) solutions could collectively be worth around $7.6 trillion, addressing scalability issues and facilitating widespread adoption.
Economic Shifts and Bitcoin’s Role
VanEck’s report highlighted that the rise of Bitcoin will be partly driven by a decline in the leading global economies, such as the United States, the European Union, and Japan, relative to global economic activity. It also pointed to a potential loss of confidence in these economies’ currencies due to unconstrained deficit spending, which could drive demand for Bitcoin as a neutral medium of exchange with immutable property rights and predictable monetary policy.
The diminishing use of the euro and Japanese yen in international settlements presents an opportunity for Bitcoin. The report noted that the euro’s share of cross-border payments has decreased from 22% in the mid-2000s to 14.5% today, while the yen’s share has declined from 6.2% to 5.4%.
Despite the potential, VanEck flagged challenges such as mining, scalability, and regulation as risks to Bitcoin’s continued adoption. The firm also noted that while gold remains a well-established global reserve asset, logistical, security, and financial integration issues pose hurdles to returning to a gold standard.
VanEck identified 16 high-potential Bitcoin L2 projects, including the Lightning Network and Stacks, but noted it is too early to declare winners among them.
Marathon Digital Holdings Buys 20,000 BTC, will HODL
Marathon Digital Holdings Inc. (MARA), one of the largest Bitcoin (BTC) miners, has announced the acquisition of $100 million worth of Bitcoint. The company will HODL, it said.
The company revealed on Thursday that it now holds over 20,000 BTC, valued at nearly $1.3 billion based on current prices, and intends to continue purchasing more Bitcoin, and to HODL it.
In a statement, Marathon’s CFO, Salman Khan, explained the decision, noting, “Bitcoin’s recent price decline, coupled with the strength of our balance sheet, afforded us an opportunity to add to our holdings. We look forward to continuing to leverage our technological expertise to support Bitcoin and distributed digital asset ecosystems.”
This strategic shift to a “HODL” approach—holding onto all mined Bitcoin—marks a significant change for Marathon. The company had previously adopted a strategy of selling mined Bitcoin to cover operating expenses, especially during the crypto winter when the market declined sharply. This move to liquidate assets was common among miners during the prolonged bear market. However, Marathon is now joining other miners who are returning to the strategy of retaining their Bitcoin holdings, a tactic that proved beneficial during previous bull markets.
Marathon’s Chairman and CEO, Fred Thiel, emphasized the company’s commitment to Bitcoin, stating on X, “Adopting a full HODL strategy reflects our confidence in the long-term value of Bitcoin. We believe Bitcoin is the world’s best treasury reserve asset and support the idea of sovereign wealth funds holding it. We encourage governments and corporations to all hold Bitcoin as a reserve asset.”
