The relationship between crypto and traditional finance is no longer a one-way street. According to BlackRock, Bitcoin exchange-traded funds (ETFs) are not only bringing traditional investors into crypto they are also encouraging crypto-native investors to explore broader financial markets.
Speaking on the Chain Reaction podcast, Jay Jacobs, BlackRock’s US Head of Equity ETFs, revealed that nearly 75% of investors in the iShares Bitcoin Trust (IBIT) had never owned an ETF before.
The data highlights how Bitcoin ETFs are evolving beyond a simple investment vehicle and becoming an entry point into the wider world of traditional finance.
Bitcoin ETFs Become a Gateway Product
When spot Bitcoin ETFs launched in the United States in January 2024, the prevailing narrative was that they would allow traditional investors to gain exposure to digital assets through familiar investment products.
But according to Jacobs, the trend is increasingly moving in both directions.
“IBIT was a way for traditional investors to get into digital assets. But we’ve also seen many people begin with Bitcoin ETFs and then explore other ETF products,” he said.
BlackRock’s iShares Bitcoin Trust (IBIT) has become the dominant product in this space, managing approximately $48 billion in assets and holding more than 765,000 BTC, making it one of the largest institutional holders of Bitcoin globally.
From Bitcoin to Stocks, AI and Gold
BlackRock says many investors who initially entered through Bitcoin ETFs are now diversifying their portfolios into more traditional assets.
Among the products seeing increased interest are:
- S&P 500 ETFs
- Artificial Intelligence-themed funds
- Gold ETFs
- Broader equity index products
Jacobs explained that IBIT has helped BlackRock engage with an entirely new generation of investors.
“We absolutely see this as a way to engage with a different group of people than maybe we’ve engaged with in the past.”
This crossover is becoming one of the defining themes of modern financial markets.
The Rise of the “Great Convergence”
BlackRock refers to this evolving relationship between crypto and traditional finance as the “Great Convergence.”
The idea is simple:
The boundaries that once separated financial ecosystems are beginning to disappear.
Historically, investors viewed markets through clear distinctions:
- Crypto versus traditional finance
- DeFi versus banks
- Private markets versus public markets
- Active investing versus passive investing
According to Jacobs, that mindset is rapidly changing.
“I think you’re going to hear a lot less about ‘versus’—TradFi versus DeFi—and a lot more about ‘and.’ It’s TradFi and DeFi.”
In other words, investors increasingly want access to all asset classes within a single investment framework.
Crypto and Wall Street Are Growing Closer
Recent market developments reinforce this trend.
The high-profile SpaceX IPO offered a glimpse into how crypto and traditional finance are beginning to merge.
Crypto traders were able to gain exposure to SpaceX through:
- Pre-IPO perpetual futures
- Tokenized stocks
- On-chain trading products
- Synthetic equity markets
These products allow traders to speculate on private companies before they begin trading on traditional exchanges.
What was once only accessible to venture capital firms and institutional investors is gradually becoming available to a broader audience through blockchain-based infrastructure.
Pre-IPO Markets Are Exploding
The demand for these hybrid products has grown rapidly.
According to market data:
- Pre-IPO perpetual trading volume has surged from around $1 billion in early May to approximately $22 billion.
- Major crypto exchanges now offer pre-IPO products.
- Binance has emerged as the leading venue for this new market segment.
The trend suggests that crypto users are no longer satisfied with trading only cryptocurrencies—they increasingly want access to stocks, commodities, private companies, and real-world assets through blockchain-based platforms.
BlackRock Expands Its Bitcoin Product Line
As interest grows, BlackRock is expanding its crypto offerings.
This week, the firm introduced the iShares Bitcoin Premium Income ETF (BITA), a product designed to generate income by selling covered call options on Bitcoin holdings.
The launch signals another stage in the maturation of crypto investing:
Bitcoin is no longer viewed solely as a speculative asset. It is increasingly becoming part of broader portfolio construction strategies that include income generation, diversification, and risk management.
The Bigger Picture
BlackRock’s latest observations point to a significant shift in investor behavior.
Bitcoin ETFs are no longer just bridging traditional finance and crypto—they are blending the two worlds together.
The result is a financial ecosystem where:
- Crypto investors buy traditional assets.
- Traditional investors hold digital assets.
- Tokenized securities coexist with stocks.
- DeFi protocols interact with institutional capital.
For BlackRock, this is not a temporary trend.
It is the Great Convergence—and it may redefine how investors build portfolios for the next decade.
