BlackRock and other bitcoin exchange-traded funds (ETFs) pose a potential threat to the growth of bitcoin. While bitcoin is increasingly being accepted by companies and brands for payment, its use for everyday transactions is still limited. Instead, bitcoin is gaining popularity as a means of exchange in strategic investments and as an alternative investment for institutional investors seeking diversification.
One significant impact on bitcoin’s adoption is the increased popularity of bitcoin ETFs, with BlackRock becoming one of the largest purchasers of bitcoin ever. However, the vice grip that institutions like BlackRock have on bitcoin in order to fill their ETFs is limiting the circulating supply of bitcoin. This monopolization by big players may hinder the companies, founders, and investors who prefer to use bitcoin as a medium of exchange.
The catch-22 situation is that the price increases driven by institutional investors make bitcoin even more attractive as an investment and store of value. To address this issue, regulatory support for the approval of more financial products leveraging bitcoin’s value is needed. This can alleviate the pressure on ETF buying and provide alternative investment options.
Additionally, the approval of financial products leveraging other digital assets and the licensing of fiat-to-bitcoin payment and exchange rails can help increase the circulation of bitcoin in the market. Within the Web3 ecosystem, investors are already backing promising startups with crypto assets. However, ensuring sufficient circulating supply requires diverse financial products and increased access to mediums of exchange.
Ideally, major players like BlackRock should support this plan, as their demand for digital currency investment products is evident through the popularity of bitcoin ETFs. By diversifying the investment landscape and enhancing market liquidity, bitcoin can continue to grow while providing opportunities for both investors and companies funding their operations with bitcoin.