BlackRock’s digital asset funds attracted approximately $15 billion in net inflows over the past year, but declining cryptocurrency prices significantly reduced the value of those holdings.

The asset management giant’s crypto business experienced a major contraction despite continued investor interest in its digital asset products, highlighting the strong influence of market movements on crypto-linked investments.

In its latest earnings report, BlackRock revealed that its digital asset products were valued at $48.8 billion at the end of the second quarter, down from $79.6 billion a year earlier. This represents a decline of nearly 39% over the period.

The drop occurred even with $15.1 billion in net investor inflows during the previous 12 months. According to BlackRock’s filing, those inflows were outweighed by roughly $45.8 billion in losses caused by market depreciation, showing the sensitivity of the company’s crypto ETF business to asset price changes.

The weakness continued during the second quarter, with BlackRock’s digital asset products seeing $3.1 billion in net outflows.

The decline coincided with a challenging quarter for the cryptocurrency market. Bitcoin (BTC) and ether (ETH) both struggled to regain momentum, with bitcoin falling more than 14% during the period and ether declining 25%.

The results differed from BlackRock’s broader business performance. The firm reported record assets under management of $15.3 trillion after securing $192 billion in quarterly net inflows. It also surpassed analyst expectations with adjusted earnings per share of $13.91 and revenue of $7.08 billion.

BlackRock shares gained 4.15% to £1,068 in pre-market trading on Wednesday.

BlackRock’s digital asset ambitions

BlackRock said it plans to grow its crypto business to generate $500 million in annual revenue by 2030.

The goal would mark a more than tenfold increase from the approximately $40 million the firm currently earns through crypto-related base fees and securities lending, which represent less than 1% of its total fee revenue.

The company has continued expanding its cryptocurrency offerings since launching its spot bitcoin ETF (IBIT) and spot ether ETF (ETHA) in 2024. Its latest product, the iShares Bitcoin Income ETF (BITY), uses covered-call strategies on bitcoin exposure to provide investors with an income-focused alternative.

BlackRock has also expanded its role in the stablecoin sector by managing around $60 billion of Circle’s reserves, representing a significant portion of the broader $300 billion stablecoin market. The firm said it aims to become a leading reserve manager for the industry.

During its earnings call, BlackRock highlighted the potential of roughly 5 billion crypto wallets worldwide as a new distribution channel for traditional investment products.

Martin Small, the company’s chief financial officer, said these wallet users could become future customers for model portfolios, managed accounts and tokenized investment products. He added that BlackRock aims to develop a digital wallet-focused asset management platform.