Behind the Global Risk Asset Rebound: Asset Management Giant Vanguard Shifts Toward Crypto

Author: Ye Zhen, Wallstreetcn

On Tuesday, Bitcoin and other cryptocurrencies led a rebound in risk assets, driven by a major shift from global asset management giant Vanguard Group.

After Monday’s sharp sell-off, Bitcoin recovered strongly above the $90,000 mark on Tuesday, surging over 6% in a single day, while Ethereum climbed back above $3,000. Meanwhile, Trump hinted that his economic advisor Kevin Hassett is a potential candidate for Federal Reserve Chair. Coupled with stabilization in Japanese bond auctions, this put pressure on US Treasury yields and the US Dollar Index, which dipped slightly. Eased concerns over market liquidity fueled a significant rebound in global risk assets.

On Tuesday, Vanguard Group confirmed that clients can now use its brokerage platform to purchase third-party cryptocurrency ETFs and mutual funds, such as BlackRock’s iShares Bitcoin Trust ETF. This marks the first time the asset management giant, known for its conservative investment philosophy, has opened cryptocurrency investment channels to its 8 million self-directed brokerage clients.

Bloomberg analyst Eric Balchunas pointed out that this is a classic “Vanguard Effect.” On the first trading day after Vanguard’s pivot, Bitcoin surged as the US market opened, and BlackRock’s IBIT surpassed $1 billion in trading volume within the first 30 minutes, demonstrating that even conservative investors are seeking a bit of excitement in their portfolios.

Vanguard had previously refused to engage with cryptocurrencies, arguing that digital assets were too speculative and volatile, and did not align with its core philosophy of long-term balanced portfolios. The pivot now reflects persistent retail and institutional demand pressures, as well as concerns over missing out on a rapidly growing market opportunity.

As BlackRock achieves great success with its Bitcoin ETF, Vanguard’s softening stance toward this emerging asset class—despite its adherence to “Bogleism”—will have a profound impact on future capital flows.

Vanguard’s Major Shift: From “Resistance” to “Openness”

The core driver behind this market sentiment reversal is the change in attitude from Vanguard, the world’s second-largest asset manager. As confirmed by Bloomberg, starting Tuesday, Vanguard will allow clients with brokerage accounts to buy and trade ETFs and mutual funds that primarily hold cryptocurrencies (such as BlackRock’s IBIT).

This decision is a clear compromise. Since the approval of spot Bitcoin ETFs in the US in January 2024, Vanguard had banned trading of such products on its platform, citing “high volatility and speculation of digital assets, making them unsuitable for long-term portfolios.” However, as Bitcoin ETFs attracted tens of billions of dollars in assets—and BlackRock’s IBIT still boasts $70 billion in assets even after pullbacks—ongoing demand from clients, both retail and institutional, forced Vanguard to change its stance.

Moreover, Vanguard’s current CEO, Salim Ramji, was formerly a BlackRock executive and a longtime advocate of blockchain technology, which is seen as an internal factor in the policy shift. Vanguard executive Andrew Kadjeski stated that cryptocurrency ETFs have withstood market volatility and that management processes are now mature.

Nevertheless, Vanguard is still exercising some restraint: the company has made it clear that there are currently no plans to launch its own cryptocurrency investment products, and leveraged or inverse crypto products remain excluded from its platform.

The Duopoly Faces a Shake-Up

Vanguard’s move brings its three-decade-long rivalry with BlackRock back into the spotlight. According to the book “The First Lesson in Global ETF Investing,” the two companies represent starkly different investment philosophies and business models.

BlackRock represents “technique.” Founder Larry Fink was a top bond trader, and BlackRock’s original intent was “to make better trades.” Its core strength lies in its powerful risk management system “Aladdin” and a comprehensive product lineup. BlackRock’s iShares has over 400 ETFs covering all asset classes worldwide. For BlackRock, ETFs are tools to meet client trading needs and build portfolios, so it does not exclude any asset class. Whether by promoting ESG investing to avoid “climate risk” or being first to launch a spot Bitcoin ETF (IBIT exceeded $10 billion in seven weeks, far surpassing Vanguard’s expectations and breaking the gold ETF record that took three years), BlackRock is committed to being the market’s best “pick-and-shovel seller.”

Vanguard sticks to “principle.” Although founder John Bogle has passed away, his philosophy remains the soul of Vanguard: the best long-term choice for investors is to hold broad-market index funds, and Vanguard’s mission is to drive costs to the lowest possible level. Thanks to its unique “mutual ownership” structure, Vanguard’s fees are extremely low, with only about 80 ETFs, mainly focused on broad-based indices like VOO and VTI. Its client base consists mainly of fee-sensitive long-term investors and advisors.

The differences between the two companies are highlighted by their approaches to spot Bitcoin ETFs. BlackRock applied as early as June 2023, and its IBIT ETF surpassed $10 billion in assets within seven weeks of listing, breaking the record set by gold ETF GLD by three years. Vanguard, meanwhile, only allowed clients to trade third-party crypto products this week.

The market is pragmatic. As Vanguard’s market share in US ETFs continues to approach and may even surpass BlackRock, spot Bitcoin ETFs have become a key variable. Faced with BlackRock’s huge first-mover advantage in crypto assets and strong client demand for diversification, Vanguard ultimately chose to relax its position on trading channels.

Although Vanguard’s crypto policy adjustment is late, the potential demand of its 8 million self-directed clients cannot be underestimated. This change may not only affect short-term capital flows but could also reshape the long-term competitive landscape between the two giants.