BlackRock’s crypto-focused products attracted $15 billion in fresh capital over the past year, but a decline in digital asset prices caused the overall value of its cryptocurrency holdings to drop sharply.
The world’s largest asset manager saw its digital asset portfolio contract significantly despite strong investor demand for its crypto offerings, underscoring the impact of market volatility on its blockchain-related business.
BlackRock reported that the value of its digital asset products declined to $48.8 billion at the end of the second quarter, compared with $79.6 billion a year earlier. The decrease represents a loss of nearly 39% in total asset value.
The decline came despite $15.1 billion in net inflows over the previous 12 months. However, those inflows were more than offset by $45.8 billion in market depreciation, showing how closely the firm’s crypto ETF business remains connected to cryptocurrency prices.
The negative trend continued during the second quarter, when BlackRock’s digital asset products recorded $3.1 billion in net outflows.
The weakness reflected a difficult period for the broader crypto market. Bitcoin (BTC) and ether (ETH) both struggled during the quarter, with bitcoin dropping more than 14% and ether declining 25% as both assets faced continued selling pressure.
The performance of BlackRock’s crypto division contrasted with the company’s wider operations. Total assets under management reached a record $15.3 trillion after the firm attracted $192 billion in net inflows during the quarter. BlackRock also exceeded market expectations, reporting adjusted earnings per share of $13.91 on revenue of $7.08 billion.
BlackRock shares climbed 4.15% to £1,068 in pre-market trading on Wednesday.
BlackRock’s crypto expansion plans
BlackRock said it is aiming to generate $500 million in annual revenue from its digital asset business by 2030 as part of its long-term growth strategy.
The target would represent more than a tenfold increase from the roughly $40 million the company currently earns from crypto-related base fees and securities lending, which make up less than 1% of its total fee revenue.
The firm has expanded its crypto ETF presence since launching its spot bitcoin ETF (IBIT) and spot ether ETF (ETHA) in 2024. It recently added the iShares Bitcoin Income ETF (BITY), which uses covered-call strategies on bitcoin exposure to provide investors with an alternative income-generating approach.
Beyond ETFs, BlackRock manages around $60 billion in Circle’s reserves, giving it a major role in the stablecoin ecosystem. The firm said it wants to become a leading reserve manager as the stablecoin market continues to grow.
During its earnings call, BlackRock pointed to the estimated 5 billion crypto wallets globally as a potential gateway for distributing traditional investment products.
Martin Small, BlackRock’s chief financial officer, said crypto wallet users could become future customers for model portfolios, managed accounts and tokenized financial products. He added that the company’s goal is to develop a digital wallet-native asset management platform.
