BlackRock Predicts Crypto ETFs in Model Portfolios by Late 2024

KEYTAKEAWAYS

Crypto ETFs expected to enter model portfolios by late 2024.
BlackRock foresees significant growth in model portfolio management.

TABLE OF CONTENTS

KEY TAKEAWAYS
DISCLAIMER
WRITER’S INTRO

CONTENT

BlackRock’s CIO for ETFs, Samara Cohen, anticipates digital currency-backed ETFs to be integrated into model portfolios by year-end. Major wirehouses are conducting due diligence on Bitcoin and Ether’s roles in diversified investment strategies.

BlackRock’s Chief Investment Officer for ETF and Index Investments, Samara Cohen, has projected that digital currency-backed exchange-traded funds (ETFs) will likely be incorporated into “model portfolios” toward the end of 2024. This insight was shared during a Bloomberg interview on July 29, highlighting the growing acceptance of cryptocurrencies in mainstream investment strategies.

>> Also read: BlackRock: From Global Asset Management to Blockchain Ventures

Cohen noted that major wirehouses such as Morgan Stanley, Wells Fargo, and UBS are currently conducting risk analytics and due diligence on Bitcoin and Ether, evaluating their potential roles in diversified portfolios. She emphasized, “What will happen toward the end of this year and into next year is we will see allocations into model portfolios which will give us much more of a steer into how investors are using them.”

Model portfolios, typically offered by large, full-service brokerage firms, represent pre-designed investment strategies that balance risk and return based on transparent methodologies. BlackRock anticipates substantial growth in this sector, projecting an increase from the current $4.2 trillion to $10 trillion in model portfolio management over the next five years.

Cohen highlighted the distinct characteristics of Bitcoin and Ether as asset classes, noting their utility as “portfolio diversifiers.” Addressing the recent outflows from spot Ether ETFs, she remained optimistic, viewing these products as valuable “access points” for investors seeking ETH exposure within their portfolios.

The Grayscale Ethereum Trust has experienced significant outflows, shedding $1.7 billion since its spot ETF conversion. Cohen attributed some of these movements to investors seeking more efficient vehicles for cryptocurrency exposure within trusted ecosystems.

Looking ahead, Cohen and Robert Mitchnick, BlackRock’s head of digital assets, tempered expectations for a rapid expansion of crypto ETFs beyond Bitcoin and Ether. Mitchnick stated at the Bitcoin 2024 conference, “I don’t think we’re gonna see a long list of crypto ETFs,” suggesting a measured approach to cryptocurrency integration in traditional investment products.

>> Read more: