On Tuesday, cryptocurrencies like Bitcoin led a rebound in risk assets, driven by a significant policy shift from global asset management giant Vanguard.
After Monday's steep decline, Bitcoin surged past $90,000 on Tuesday, gaining over 6% in a single day, while Ethereum reclaimed the $3,000 level. Meanwhile, former President Trump hinted that his economic advisor Kevin Hassett could be a potential Federal Reserve chair nominee, coupled with stabilizing Japanese bond auctions, which slightly pressured U.S. Treasury yields and the dollar index. Eased liquidity concerns further fueled the global risk asset rally.
Vanguard confirmed on Tuesday that clients can now purchase third-party cryptocurrency ETFs and mutual funds, including BlackRock's iShares Bitcoin Trust ETF (IBIT), through its brokerage platform. This marks the first time the conservative investment giant has opened crypto investment access to its 8 million self-directed brokerage clients.
Bloomberg analyst Eric Balchunas noted this as a classic "Vanguard effect." On the first trading day following Vanguard's policy shift, Bitcoin rallied sharply at the U.S. market open, with BlackRock's IBIT surpassing $1 billion in trading volume within just 30 minutes—highlighting demand even among conservative investors to "spice up" portfolios.
Previously, Vanguard had firmly resisted crypto, dismissing digital assets as overly speculative and volatile for its long-term balanced portfolio philosophy. The reversal reflects mounting retail and institutional demand pressures, alongside fears of missing out on a rapidly growing market opportunity.
As BlackRock thrives with its Bitcoin ETF success, Vanguard's loosening stance on this emerging asset class—despite its adherence to "Boglehead" principles—could significantly influence future capital flows.
**Vanguard's Major Shift: From Resistance to Openness** The market sentiment reversal stems largely from the world's second-largest asset manager's policy change. Bloomberg confirmed that starting Tuesday, Vanguard permitted brokerage clients to trade crypto-holding ETFs and mutual funds like BlackRock's IBIT.
This decision marks a clear compromise. Since U.S. Bitcoin spot ETF approvals in January 2024, Vanguard had banned such products, citing crypto's volatility and speculative nature as unfit for long-term portfolios. However, with Bitcoin ETFs attracting billions and BlackRock's IBIT holding $70 billion even after pullbacks, relentless client demand—from both retail and institutions—forced Vanguard's hand.
Internally, CEO Salim Ramji—a former BlackRock executive and longtime blockchain advocate—is seen as a catalyst for the shift. Vanguard executive Andrew Kadjeski noted crypto ETFs have proven resilient through market swings, with mature management processes.
Yet Vanguard remains measured: it ruled out launching proprietary crypto products and still bars leveraged/inverse crypto offerings.
**A Reshaped Rivalry** Vanguard's move reignites its three-decade competition with BlackRock. As outlined in *ETF Global Investment Primer*, the firms embody opposing philosophies.
BlackRock represents "tactics." Founder Larry Fink, a top bond trader, built the firm to "execute better trades." Its edge lies in the Aladdin risk system and comprehensive product suite, including 400+ iShares ETFs spanning all assets. For BlackRock, ETFs are tools to meet client trading needs—hence its embrace of any asset class, from ESG to Bitcoin (IBIT hit $10 billion in seven weeks, dwarfing gold ETF GLD's three-year milestone).
Vanguard upholds "principles." Despite founder John Bogle's passing, his legacy endures: investors' best long-term bet is broad-market indexes, and Vanguard's mission is cost minimization. Its unique mutual ownership structure enables ultra-low fees, with just 80+ ETFs focused on broad indices like VOO and VTI, catering to fee-sensitive buy-and-hold investors.
Their divergence crystallized in Bitcoin spot ETFs. BlackRock filed in June 2023; IBIT’s $10 billion haul set records. Vanguard only relented this week on third-party crypto products.
Market realities prevail. As Vanguard nears or potentially surpasses BlackRock in U.S. ETF market share, Bitcoin ETFs became pivotal. Facing BlackRock’s crypto head start and client demands for diversification, Vanguard finally opened trading access.
Though delayed, Vanguard’s 8 million self-directed clients represent substantial latent demand. This shift may not only redirect short-term flows but redefine the long-term rivalry between these two giants.
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