Crypto Downturn Cuts BlackRock’s Digital Assets by 39% Amid Heavy Demand

BlackRock’s digital asset portfolio attracted around $15 billion in net inflows over the past year, but falling cryptocurrency prices caused the value of its holdings to decline substantially.

Despite strong demand for its crypto investment products, the world’s largest asset manager saw its digital asset business shrink sharply, highlighting how closely its performance remains tied to broader crypto market conditions.

According to BlackRock’s latest earnings report, digital asset products totaled $48.8 billion in assets at the end of the second quarter, down from $79.6 billion a year earlier. The decline represents a nearly 39% reduction in portfolio value.

The drop came even as investors added $15.1 billion to BlackRock’s crypto products over the last 12 months. However, those inflows were overwhelmed by approximately $45.8 billion in losses caused by falling asset prices, demonstrating the impact of market volatility on the firm’s crypto ETF business.

The pressure continued during the second quarter, with BlackRock’s digital asset products posting $3.1 billion in net outflows.

The decline followed a difficult period for the broader cryptocurrency market. Bitcoin (BTC) and ether (ETH) both struggled during the quarter, with bitcoin losing more than 14% and ether falling 25% as both assets remained under pressure.

BlackRock’s crypto performance contrasted with the strength of its overall business. The firm reached a record $15.3 trillion in assets under management after attracting $192 billion in quarterly net inflows. It also exceeded Wall Street expectations, reporting adjusted earnings per share of $13.91 on revenue of $7.08 billion.

BlackRock shares rose 4.15% to £1,068 in pre-market trading on Wednesday.

BlackRock’s crypto growth strategy

BlackRock said it is targeting $500 million in annual revenue from its digital asset division by 2030 as it continues expanding its presence in the crypto market.

The target represents more than a tenfold increase from the roughly $40 million the firm currently earns through crypto-related management fees and securities lending, which account for less than 1% of total fee revenue.

The asset manager has continued building its crypto product lineup since launching its spot bitcoin ETF (IBIT) and spot ether ETF (ETHA) in 2024. It later introduced the iShares Bitcoin Income ETF (BITY), which uses covered-call strategies on bitcoin exposure to generate potential income for investors.

Beyond ETFs, BlackRock manages approximately $60 billion of Circle’s reserves, making it a major participant in the stablecoin ecosystem. The firm said it hopes to become a leading reserve manager as the stablecoin market expands.

During its earnings call, BlackRock highlighted the potential of an estimated 5 billion crypto wallets as a future distribution channel for traditional financial products.

Martin Small, BlackRock’s chief financial officer, said crypto wallet users could become future customers for model portfolios, managed accounts and tokenized investment products. He added that the firm wants to create a digital wallet-native asset management platform.