BlackRock Defies Market Slump: $14B Floods Into Crypto in Q2 While Traditional Funds Stagnate

Wall Street's love affair with crypto isn't cooling off—it's going nuclear. While legacy funds sputter, BlackRock just reported a $14 billion tidal wave into digital assets last quarter.

The institutional stampede continues

No slowdown here. The world's largest asset manager keeps stacking crypto like it's 2021—except this time, the smart money's leading the charge.

Traditional finance? More like traditional snails

As bond funds crawl and equity ETFs yawn, crypto products are vacuuming up capital at hedge-fund-manager-on-a-coke-binge speeds. Somewhere in Midtown, a gray-haired portfolio manager just muttered 'blockchain' into his Bloomberg terminal.

One cynical take? Maybe BlackRock knows something the SEC doesn't—like how to actually make money in this regulatory clown show.

According to BlackRock’s quarterly earnings report released on Tuesday, inflows into its iShares crypto exchange-traded funds soared to $14 billion in the second quarter - from $3 billion in Q1 2025. This spike represents 16.5% of all net ETF inflows for the firm, a significant jump from just 2.8% in the previous quarter.

This dramatic increase marks the first time BlackRock’s crypto ETF products captured a double-digit share of overall inflows. While digital assets still contribute modestly to total base fees - about 1% - the growth trajectory signals increasing relevance within the firm's broader investment strategies.

Despite the crypto momentum, BlackRock reported a decline in total net flows, which dropped 19% from $84 billion in Q1 to $68 billion in Q2. The company attributed the fall largely to a “single institutional client’s $52 billion lower-fee index partial redemption,” suggesting that the decline was an isolated event rather than a broader trend.

Yet, even with reduced aggregate inflows, the strength of BlackRock’s digital asset ETFs is difficult to ignore. CEO Larry Fink highlighted the firm's expanding digital strategy during the earnings call: “iShares ETFs had a record first half in flows, and technology ACV growth reached a fresh high of 16%. We’re attracting a new and increasingly global generation of investors through things like our digital assets offerings and recently launched funds in India through our joint venture Jio BlackRock.”

The comment reinforces BlackRock’s vision of building a modern investment platform that appeals to both traditional investors and the next wave of crypto-savvy institutions.

Digital Assets' Growing Contribution to Revenue

As of June 30, digital assets generated $40 million in base fees for BlackRock - up 18% from $34 million in Q1. While that figure still represents only about 1% of long-term revenue, it is evidence of accelerating traction.

BlackRock emphasized that the crypto-related revenue contribution is expected to grow over time, particularly as adoption continues to rise across institutional investors, asset managers, and sovereign wealth funds.

The growth in ETF demand is closely tied to the broader acceptance of spot crypto ETFs in regulated markets. BlackRock’s iShares Bitcoin Trust (IBIT), one of the first spot BTC ETFs approved in the U.S., has become one of the top-performing products in the space, regularly posting daily inflows in the hundreds of millions.

Following its Bitcoin ETF success, BlackRock launched the iShares ethereum Trust earlier this year. The ETH ETF also contributed to Q2’s inflow surge, benefiting from increased confidence in Ethereum’s institutional adoption and ETF-based staking prospects.

Strategic Expansion Through Jio BlackRock and Emerging Markets

Beyond crypto, BlackRock’s growth strategy remains focused on geographic and technological diversification. Its partnership with Indian conglomerate Reliance Industries via the Jio BlackRock joint venture reflects its intent to tap into emerging markets with digitally native investment products.

The partnership aims to launch a series of mutual funds and ETFs that align with the digital preferences of Indian investors, many of whom are already active in crypto trading.

“Digital engagement and new asset formats go hand-in-hand,” Fink noted. “Our goal is to future-proof the investment ecosystem with platforms that accommodate both mainstream and alternative asset classes.”

Analyst Reactions: Bullish on BlackRock’s Crypto Positioning

Market analysts have interpreted the Q2 earnings as a bullish signal for the institutionalization of digital assets. “BlackRock’s crypto inflow growth isn’t just about numbers - it’s about validation,” said Sean Farrell, head of digital asset strategy at Fundstrat. “If the largest asset manager on the planet is scaling into digital assets this aggressively, it’s a powerful indicator that the trend is here to stay.”

Other experts echoed that sentiment, particularly in light of increasing regulatory clarity in the U.S., the EU’s MiCA framework rollout, and Hong Kong’s push toward licensed stablecoins and spot ETF structures.

With Q3 already underway, several upcoming catalysts could extend BlackRock’s crypto inflow trend:

• Expected approval of Ethereum staking ETFs in the U.S. could further boost ETH-focused products.
• Bitcoin’s price momentum, now hovering near $120,000, may attract fresh capital.
• Growing interest in tokenized real-world assets could push BlackRock to explore new crypto-linked products beyond BTC and ETH.
• Expanded custody and staking integrations via Zodia Custody and Zodia Markets, both BlackRock-backed firms, may attract more institutions.

As the line between traditional and decentralized finance continues to blur, BlackRock appears well-positioned to act as a bridge - both technologically and strategically.