March 29, 2024

BlackRock's BUIDL Ethereum Fund Surges to $275 Million within Just 7 Trading Days

BlackRock's BUIDL Ethereum fund, initially seeded with $5 million, has skyrocketed to $275 million since its launch on March 20th.

BlackRock's Ethereum-based BUIDL fund has experienced a meteoric rise, amassing an impressive $274.8 million in Ethereum tokens within a mere week of its inception. Beginning with a modest $5 million on March 20th, the fund swiftly attracted significant investment.

According to data, eleven transactions have streamed into the BlackRock USD Institutional Digital Liquidity Fund, propelling its value to unprecedented heights.

The influx of capital into the ERC-20-based fund has been remarkable, with an additional $269.8 million pouring in, including a substantial $92 million allocation from Ondo Short-Term US Government Treasuries, facilitated by the tokenized real-world asset platform Ondo Finance.

Expressing enthusiasm for BlackRock's foray into securities tokenization with the BUIDL launch, Ondo Finance remarked in a recent blog post:

“We’re excited to see BlackRock embracing securities tokenization with the launch of BUIDL, especially its broad cooperation with ecosystem participants. Not only does this further validate our original concept of a tokenized US Treasury fund, but it also bolsters our thesis that tokenization of traditional securities on public blockchains represents the next major step in the evolution of financial markets.”

Although not classified as a stablecoin like USDT or USDC, BlackRock assures that BUIDL's value is pegged at 1:1 with the U.S. dollar, with each BUIDL equivalent to $1. Stablecoins play a crucial role in providing stability amidst the volatility of the cryptocurrency market and facilitating transitions to exchanges for fiat or alternative tokens.

BlackRock has outlined the fund's investment strategy, disclosing that it allocates 100% of its assets into cash, U.S. Treasury bills, and repurchase agreements.

The launch of the BlackRock USD Institutional Digital Liquidity Fund was preceded by BlackRock's filing of documents with the US Securities and Exchange Commission for the British Virgin Island-based fund. This development reignited hopes for the eventual introduction of a spot ether ETF, despite the SEC's postponement of its decision on eight proposals until the end of May.

According to data from the real-world assets (RWA) platform, BlackRock's BUIDL ranks second, trailing behind Franklin Templeton's Franklin OnChain U.S. Government Money Fund, which boasts a market capitalization of $360.3 million. The Ethereum-based BlackRock BUIDL fund currently holds a market capitalization of $244.8 million.

BlackRock CEO Larry Fink, in an interview with CNBC in January, articulated his support for crypto-based exchange-traded funds following the SEC's approval of the first bitcoin ETFs:

"I see value in having an ether ETF. As I said, these are just stepping stones towards tokenization."

While interest in a spot ether ETF is substantial, it is unlikely to match the fervor witnessed with bitcoin ETFs, which garnered a staggering $4.5 billion on their debut day.

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