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Author: Ye Zhen, Wall Street News
Cryptocurrencies such as Bitcoin led a rebound in risk assets on Tuesday, behind a major pivot from global asset management giant Vanguard Group.
After experiencing Monday’s plunge, Bitcoin strongly regained the $90,000 mark on Tuesday, with a single-day increase of more than 6%, and Ethereum returned to above $3,000.At the same time, Trump hinted that his economic adviser Kevin Hassett is a potential candidate for the chairman of the Federal Reserve, which coupled with the stabilization of Japanese bond auctions, put pressure on U.S. bond yields and the U.S. dollar index to fall slightly. Market liquidity anxiety eased, promoting a significant rebound in global risk assets.
Vanguard Group confirmed on Tuesday that clients can now purchase third-party cryptocurrency ETFs and mutual funds such as the BlackRock iShares Bitcoin Trust ETF through its brokerage platform.This is the first time that this asset management giant, known for its conservative investment philosophy, has opened cryptocurrency investment channels to its 8 million self-operated brokerage customers.
Bloomberg analyst Eric Balchunas pointed out that this is a typical “vanguard effect.” On the first trading day after the pioneer shift, Bitcoin immediately rose sharply during the opening of U.S. stocks. BlackRock’s IBIT’s trading volume exceeded $1 billion within 30 minutes of the opening, showing that even conservative investors want to “add some stimulation” to their investment portfolios.
Vanguard has previously steadfastly refused to get involved in the cryptocurrency field, believing that digital assets are too speculative and volatile and inconsistent with its core philosophy of long-term balanced investment portfolios.Today’s shift reflects continued retail and institutional demand pressures, as well as concerns about missing out on opportunities in fast-growing markets.
At a time when BlackRock has achieved great success with its Bitcoin ETF, the pioneers who adhere to the “Borg Doctrine” will loosen their grip on this emerging asset class, which will have a profound impact on the future flow of funds.
Major changes at Vanguard Group: from “resistance” to “openness”
The core driving force for this reversal in market sentiment stems from the change in attitude of Pioneer, the world’s second largest asset management company.Starting Tuesday, Vanguard will allow customers with brokerage accounts to buy and trade ETFs and mutual funds that primarily hold cryptocurrencies, such as BlackRock’s IBIT, Bloomberg confirmed.
The decision was an obvious compromise.Since the United States approved the listing of Bitcoin spot ETFs in January 2024, Vanguard has banned the trading of such products on its platform on the grounds that “digital assets are highly volatile, highly speculative, and unsuitable for long-term investment portfolios.”However, with Bitcoin ETFs attracting billions of dollars in assets and BlackRock’s IBIT standing at $70 billion even after the pullback, continued demand from clients, both retail and institutional, forced Vanguard to change its stance.
In addition, Vanguard’s current CEO Salim Ramji was a former BlackRock executive and a long-term advocate of blockchain technology. His appointment is also regarded as one of the internal factors for this policy shift.Vanguard executive Andrew Kadjeski said that the cryptocurrency ETF has withstood the test of market fluctuations and that the management process has matured.
However, Vanguard has maintained a certain restraint: the company has made it clear that it currently has no plans to launch its own cryptocurrency investment products, and leveraged and inverse crypto products are still excluded from the platform.
The two-hero struggle for hegemony is facing a reshuffle
Pioneer’s move has once again brought to the forefront the thirty-year-old “two heroes battle” between it and BlackRock.According to the book “The First Lesson in ETF Global Investment”, the two companies represent completely different investment concepts and business models.
BlackRock represents “skill”.Founder Larry Fink was born as a top bond trader, and BlackRock’s original intention is to “do better transactions.”Its core competitiveness lies in its powerful risk control system “Aladdin” and its full range of product systems.iShares, a subsidiary of BlackRock, has more than 400 ETFs covering various assets around the world.For BlackRock, ETFs are tools to meet clients’ trading needs and build portfolios, so they do not exclude any asset class.Whether it is promoting ESG investment to avoid “climate risks” or taking the lead in launching a Bitcoin spot ETF (IBIT’s scale exceeded 10 billion US dollars within 7 weeks of its listing, not only far exceeding Pioneer’s expectations, but also breaking the 3-year record of a gold ETF), BlackRock has always been committed to being the best “shovel seller” in the market.
Pioneers adhere to the “Tao”.Although founder John Bogle has passed away, his philosophy is still the soul of Vanguard: the best long-term option for investors is to hold an index that covers a wide range of markets, and Vanguard’s mission is to minimize costs.Thanks to its unique “common ownership” structure, Pioneer’s fees are extremely low. It only has more than 80 ETFs, mainly focusing on broad-based indices such as VOO and VTI.Its customer base is mainly long-term investors and investment advisors who are sensitive to rates.
The differences between the two companies are evident in the spot Bitcoin ETF.BlackRock submitted an application as early as June 2023. Seven weeks after its listing, the asset size of its IBIT ETF exceeded 10 billion US dollars, setting a record three years faster than the gold ETF GLD.And Vanguard only allowed customers to trade third-party cryptocurrency products until this week.
The market is real.As Vanguard’s share of the U.S. ETF market continues to approach or even surpass BlackRock, spot Bitcoin ETFs have become a key variable.Faced with BlackRock’s huge first-mover advantage in the field of crypto assets and the strong demand from customers for diversified allocations, Pioneer finally chose to relax on trading channels.
Although Pioneer’s cryptocurrency policy adjustment is long overdue, the potential demand from its 8 million self-operated customers cannot be underestimated.This change may not only affect short-term capital flows, but may also reshape the long-term competitive landscape of the two giants.
