BlackRock's Bitcoin Bet Faces Finance Skeptics, No ETFs from Vanguard, State Street

BlackRock's Bitcoin ETF move marks a pivotal moment despite ongoing skepticism in the finance sector.

By Barry Stearns

4/15, 15:55 EDT
Bitcoin / U.S. dollar
BlackRock, Inc.
Citigroup, Inc.
Goldman Sachs Group, Inc.
JP Morgan Chase & Co.

Key Takeaway

  • Despite BlackRock's support for Bitcoin, significant skepticism remains in finance, with critics labeling it a "wealth transfer mechanism."
  • Major firms like Vanguard and State Street resist offering Bitcoin ETFs to clients, highlighting ongoing institutional reluctance.
  • Skepticism persists despite the introduction of 11 U.S. Bitcoin ETFs aimed at simplifying investment in the cryptocurrency.

BlackRock's Bitcoin Endorsement

In a surprising turn of events, BlackRock, the world's largest asset manager, has thrown its weight behind Bitcoin, marking a significant moment of acceptance from the traditional finance sector. This endorsement came in the form of a filing to create a spot Bitcoin ETF, coupled with vocal support from CEO Larry Fink. While other traditional finance firms had previously endorsed Bitcoin, BlackRock's backing is seen as a pivotal moment, potentially shifting the tone around Bitcoin among finance professionals. Despite this, skepticism remains within the industry, with figures like Mike Green of Simplify Asset Management criticizing Bitcoin as an "extractive bubble" and a mechanism for wealth transfer, rather than value creation.

Industry Skepticism and Adoption

Despite BlackRock's move, a considerable portion of the finance industry continues to express doubts about Bitcoin's viability and utility. Goldman Sachs, for instance, plays a key role in BlackRock's iShares Bitcoin Trust (IBIT) but maintains that Bitcoin does not belong in investment portfolios, citing a lack of interest from its clients. Similarly, wealth management giants like Vanguard and State Street have refrained from offering spot Bitcoin ETFs to their clients, indicating a broader reluctance to embrace the cryptocurrency. This skepticism is echoed by figures like Peter Schiff, who dismisses Bitcoin as "gambling money," and Kathryn Vera of Stone X Group, who doubts Bitcoin's potential to become a reserve currency.

Contrasting Perspectives on Crypto's Future

While some asset managers and financial institutions remain wary of Bitcoin, the creation of 11 Bitcoin ETFs in the U.S. by firms including BlackRock, Fidelity, and Grayscale suggests a growing interest in making Bitcoin more accessible to investors. Despite this, Goldman Sachs' Sharmin Mossavar-Rahmani remains skeptical, questioning the cryptocurrency's investment viability due to its lack of traditional financial metrics. This skepticism contrasts sharply with the actions of competitors like J.P. Morgan Chase and Citigroup, which are exploring blockchain technology and the tokenization of assets, indicating a split in the financial industry's approach to crypto.

Street Views

  • Mike Green, Simplify Asset Management (Bearish on Bitcoin):

    "Bitcoin is just an extractive bubble. It's effectively a mechanism to transfer wealth from one group of individuals to another." "No value has been created and nothing has been done per se."

  • Goldman Sachs (Bearish on Bitcoin):

    "[Goldman Sachs] doesn’t believe bitcoin belongs in investment portfolios and that its clients are not interested in the cryptocurrency."

  • Kathryn Vera, Stone X Group (Bearish on Bitcoin):

    "Bitcoin won't be a reserve currency – economics jargon for a currency like the dollar, euro or yuan held by central banks to support global trade and finance – 'in her lifetime.'"

  • Peter Schiff (Bearish on Bitcoin):

    "This whole thing is a big bubble. It's going to collapse."