The rebound of global risk assets on Tuesday: Major changes at asset management giant Vanguard

Written by: Ye Zhen

Source: 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 steep drop, Bitcoin regained the $90,000 level strongly on Tuesday, rising more than 6% in a single day. Ethereum returned above $3,000.

At the same time, Trump hinted that his economic adviser Kevin Hassett is a potential candidate for Federal Reserve Chair. Combined with a stable Japanese bond auction, this put pressure on US Treasury yields and the dollar index, which edged down. Market liquidity concerns eased, fueling a significant rebound in global risk assets.

Vanguard Group confirmed on Tuesday that clients can now purchase third-party cryptocurrency ETFs and mutual funds, such as BlackRock’s iShares Bitcoin Trust ETF, through its brokerage platform. 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 the classic “Vanguard effect.” On the first trading day after Vanguard’s shift, Bitcoin surged at the US stock market open, and BlackRock’s IBIT saw trading volume exceed $1 billion within the first 30 minutes, showing that even conservative investors want to “add some excitement” to their portfolios.

Vanguard had previously firmly refused to get involved in cryptocurrencies, considering digital assets too speculative and volatile, inconsistent with the core philosophy of maintaining a long-term balanced investment portfolio. This turnaround reflects persistent retail and institutional demand, as well as concerns about missing out on a rapidly growing market opportunity.

Just as BlackRock is achieving huge success with its Bitcoin ETF, Vanguard’s softening stance on this emerging asset class—despite its “Bogleism” roots—will have far-reaching implications for future capital flows.

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

The core driving force behind this market sentiment reversal is Vanguard’s change in attitude—the world’s second-largest asset manager. As confirmed by Bloomberg, starting Tuesday, Vanguard allows 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 “the high volatility and speculative nature of digital assets, unsuitable for long-term portfolios.” However, as Bitcoin ETFs attracted tens of billions of dollars and BlackRock’s IBIT still managed $70 billion in assets even after pullbacks, continued demand from both retail and institutional clients forced Vanguard to change its stance.

Additionally, Vanguard’s current CEO Salim Ramji was a former BlackRock executive and a long-term advocate of blockchain technology. His appointment is seen as one internal factor in this policy shift. Vanguard executive Andrew Kadjeski stated that crypto ETFs have withstood market volatility and that management processes have matured.

However, Vanguard is still exercising caution: the company has explicitly stated it currently has no plans to launch its own cryptocurrency investment products, and leveraged/inverse crypto products remain excluded from the platform.

A New Era for the Two Giants

With this move, Vanguard and BlackRock’s three-decade-long “duopoly” is back in the spotlight. According to the book “The First Lesson in Global ETF Investing,” the two companies represent fundamentally different investment philosophies and business models.

BlackRock represents “technique.” Founder Larry Fink started out as a top bond trader, and BlackRock’s original mission was “to make better trades.” Its core competitiveness lies in its powerful risk management system “Aladdin” and a comprehensive product lineup. BlackRock’s iShares has over 400 ETFs covering all global asset classes. For BlackRock, ETFs are tools to meet client trading needs and build portfolios, so it does not exclude any asset class. Whether it’s pushing ESG investing to avoid “climate risk” or being the first to launch a spot Bitcoin ETF (IBIT surpassed $10 billion in just 7 weeks, far exceeding Vanguard’s expectations and breaking the 3-year record set by the gold ETF), BlackRock is always determined to be the market’s best “pickaxe seller.”

Vanguard stands for “principle.” Although founder John Bogle has passed away, his philosophy is still Vanguard’s soul: the best long-term option for investors is to hold broadly diversified market indexes, and Vanguard’s mission is to drive costs down to the extreme. Thanks to its unique “mutual ownership” structure, Vanguard’s fees are extremely low, offering just over 80 ETFs, mainly concentrated in broad market indexes like VOO and VTI. Its client base mainly consists of long-term, fee-sensitive investors and advisors.

The differences between the two are starkly reflected in spot Bitcoin ETFs. BlackRock filed its application as early as June 2023, and its IBIT ETF reached $10 billion in assets within 7 weeks—three years faster than the gold ETF GLD. Vanguard, on the other hand, only allowed clients to trade third-party crypto products this week.

The reality is clear. As Vanguard’s market share in US ETFs continues to catch up with and even potentially 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 diversified allocation, Vanguard ultimately chose to loosen its restrictions on trading channels.

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