BlackRock Confirmed Bitcoin Is Here To Stay | Jay Jacobs

Jay Jacobs (0:00)

When we end up in an environment where people are more concerned about institutions, concerned about geopolitics, concerned about fiat currency, maybe debasement, Bitcoin should benefit. That's also an environment where stocks and bonds tend to generally not do so well. So that fundamental diversifying nature of Bitcoin, we believe still very much holds, even as the investor base has maybe shifted over the last few years.

Anthony Pompliano (0:23)

What's going on, guys? We had a great conversation today with Jay Jacobs. He is the US head of equity ETFs at BlackRock. He's one of the big dogs who has brought ETFs into the industry. They obviously are the iBit owners, and they've brought that to the market and done a fantastic job. But in this conversation, we talk about Bitcoin, the crypto market, what's going on, why are people allocating to these structures? On top of that, we talk about AI, all the infrastructure, the entire value chain, what they think about the next leg of AI and how investors are actually allocating their capital. I think this conversation is really interesting because it's going to help you better understand not only these themes, these technologies and these opportunities, but it's also a little bit as to why ETFs have risen so quickly, why they've become so popular in people's portfolio. I think if you listen to the entire thing, not only will you walk away and be impressed by Jay, but I also think that you're going to find a lot of opportunities to go and investigate and maybe put into your portfolio. So here's my conversation with Jay Jacobs.

All right, Jay, the Bitcoin ETFs are the most successful ETF product ever launched seems. You guys were a pioneer. I remember when you guys filed for the ETF, I said, we're going to get it approved, and that's probably going to be a pretty big deal for the industry.

When you look back now, what has been the actual measurable impact on the Bitcoin industry from these ETFs?

Jay Jacobs (1:30)

I think the biggest impact has just been the amount of people that can now participate in the Bitcoin ecosystem. So if you think about before these ETFs existed, people had to go sign up on a digital asset exchange. That was a friction for many individuals. That was a prohibition for many institutions that didn't have that ability, or just an incredibly long and arduous process for even many financial advisors or AAs that had the ability to do that and set up all the plumbing for digital asset exchanges, but just they weren't there yet from a conviction behind Bitcoin perspective. So once the Bitcoin ETPs like iBit came out, it just made it as easy to access as clicking a button on a brokerage account just like you buy the S&P 500 or buy an individual stock. And so what that meant was individual investors, so many more had access to vehicle tracking Bitcoin.

Financial advisors over time got access, because we saw a lot of financial advisor platforms approve iBit and frankly approve Ether or Ethereum ETF as well. And institutions now suddenly had a very liquid vehicle to express their views as well. So it increased access.

What I think it also did was, before iBit, many advisors and institutions could kind of avoid the Bitcoin conversation. It was like, I can't-

Anthony Pompliano (2:47)

Ignore it.

Jay Jacobs (2:48)

Yeah, they couldn't buy it. So everyone has so much on their plate at all times in these institutions. So are you going to spend time learning about Bitcoin or are you going to spend time thinking about your asset allocation between stocks and bonds? I think a lot of them focused on the latter.

Once exposure to Bitcoin became available to them with iBit, it had to be a part of the conversation of how do they think about this asset class? Does it fit in their portfolio? What are they getting when they allocate to Bitcoin in a broader portfolio? And so it just really accelerated those conversations within some of the most sophisticated institutions in the world.

Anthony Pompliano (3:18)

It seems like Bitcoin's volatility has compressed. It was 80-ish vol asset. Now it's like a 35-40 vol asset.

I have heard people claim that it's because just Wall Street's participating in general. Some people say it's the ETF. Some people say, no, it's actually all of the leverage and options and various other instruments being put on top of it. Do you guys have a view as to why Bitcoin's volatility has been compressing? And will it continue to compress? And people should think of that as part of the Bitcoin story going forward?