Jay Jacobs, BlackRock’s head of U.S. equity ETF business, said Bitcoin’s volatility has dropped from around 80 in earlier periods to roughly 35-40, and he described that compression as the product of structural changes in the market rather than a single short-term driver.
Speaking with Anthony Pompliano on a podcast released on Sept. 17, 2026, Jacobs said the shift reflects the buildout of ETF and ETP-related options markets, a broader set of ways to participate, more long-term buyers, and deeper liquidity. He said Bitcoin’s ownership base has changed, but he does not think its core investment case has.
“When people worry about institutions, geopolitics, and fiat currency debasement, Bitcoin should benefit,” Jacobs said. “And in that kind of environment, stocks and bonds often do poorly.”
IBIT changed who can participate and forced Bitcoin into allocation discussions
Asked about the measurable impact of spot Bitcoin ETFs, Jacobs said the biggest change was participation. Before ETFs, retail investors had to open accounts at digital asset exchanges, institutions often faced outright restrictions, and financial advisors had to deal with a more cumbersome process. With IBIT, he said, buying Bitcoin became much closer to buying an S&P 500 product in a brokerage account.
He argued that the more important shift may have been inside institutions and advisory channels. Before IBIT, many advisors and institutions could avoid the Bitcoin conversation because they were not in a position to buy it anyway. Once the ETF launched, that changed.
“Before IBIT, a lot of advisors and institutions could pretend Bitcoin didn’t exist as a topic,” Jacobs said. “Once IBIT arrived, it had to enter the asset allocation discussion.”
He said that dynamic accelerated internal debate among some of the world’s most demanding institutions over how to classify Bitcoin and whether it belongs in portfolios.
Volatility fell from about 80 to 35-40, and BlackRock sees several reasons
Pompliano noted that Bitcoin used to be viewed as an asset with volatility around 80, while it now sits closer to 35-40. He asked whether Wall Street participation, ETFs, leverage, or options were behind the move, and whether the compression could last.
Jacobs said BlackRock does not claim to have a single answer, but he pointed to several contributors. One is the growth of ETPs and the options market built around them, which has created more ways to trade and hedge. Another is the increase in the number of participants, the amount of research, and the pool of long-term buyers, which he said can offset shorter-term trading strategies. Better liquidity and a thicker market, in his view, make lower volatility easier to sustain.
Pompliano referenced Jordi Visser’s “silent IPO” framing, which describes Bitcoin over the last year or two as something like a company quietly going public, with early holders transferring ownership to a new generation of shareholders and ETFs serving as the main channel for that transfer. Jacobs agreed that the holder base has changed and that more long-term capital has helped suppress volatility, but he said Bitcoin’s underlying role has not changed.
He described Bitcoin as a global monetary alternative that is decentralized, not controlled by any one government, and able to move across borders. That, he said, remains the source of most of its value and its diversification case.
Why large holders move into ETFs: financialization matters more than custody
Pompliano framed the crypto product market as three broad approaches: do nothing, list everything, or go deep on a very small number of assets. Jacobs said BlackRock chose the third route, focusing on Bitcoin and Ether because those two assets account for roughly two-thirds to three-quarters of total digital asset market capitalization, while adoption is still early.
He said IBIT is the world’s largest and most liquid Bitcoin ETP. On Ether, he said BlackRock offers ETHA, a non-staking product, and launched ETHB in 2026 as a staking version that lets investors access staking yield through an ETP structure.
Jacobs also discussed BIDA, which he said sells covered calls on about 30% of its Bitcoin position to generate cash flow for investors. He described the product as a response to client feedback: many investors like Bitcoin’s long-term story, but a zero-yield asset can be difficult to hold inside portfolios built around income. Adding options income, he said, makes that exposure easier to keep.
The conversation then turned to in-kind creation and redemption. Jacobs said that when IBIT first launched, regulators did not allow in-kind creation and redemption, but that later changed. He said BlackRock initially assumed the main appeal for large holders would be institutional-grade custody and security. What it found was different.
“We thought what large holders wanted was the safety of institutional-grade custody, but the bigger demand turned out to be financializing Bitcoin,” Jacobs said. “Long-term holders want to buy homes and cars, and being able to borrow against Bitcoin is a real need.”
He added that some investors want to layer on options-based protection or income strategies, while others want to swap part of their Bitcoin risk into S&P 500 exposure. Once Bitcoin sits inside an ETF wrapper such as IBIT, he said, the range of things investors can do with it expands materially.
Jacobs said the threshold for in-kind creation and redemption has also come down sharply and is now about $1.5 million per transaction, versus a much higher level before. In his telling, that has widened the pool of eligible participants.
BlackRock’s product discipline: only two crypto assets, but multiple structures
Jacobs repeatedly stressed that BlackRock is selective in crypto. The firm’s approach is not to launch products around every token, but to build around Bitcoin and Ether and then tailor structures to different investor needs.
“Bitcoin and Ether make up two-thirds to three-quarters of the entire digital asset market cap,” he said. “We have more than 480 ETFs, but the product ideas we’ve rejected may exceed that.”
That discipline, as he described it, starts with concentration in the largest pools of value. ETHB is aimed at investors who want Ether exposure with staking income. BIDA is aimed at investors who want to keep Bitcoin exposure while adding a cash-flow component. The distinction is not cosmetic. It is about matching structure to the kind of portfolio the client is trying to build.
AI is now treated inside BlackRock as a macro factor alongside GDP and rates
The podcast also spent substantial time on AI. Pompliano noted that BlackRock’s midyear thematic report devoted significant attention to the subject and that the market had at one point treated AI as if it had taken attention away from Bitcoin. Jacobs said BlackRock had already begun treating AI as a macro factor several months ago.
He said that where investors once focused on GDP and interest rates, AI adoption now sits at the same level of importance in the firm’s framework. If AI slows, markets feel it. If AI accelerates, markets benefit. In his view, AI has become important enough to affect the overall pricing level of the U.S. market.
Jacobs also said it is outdated to think of AI as only a technology theme. He described it as a healthcare theme, a legal theme, and a consumer theme as well, with implications across nearly every industry. Buying a sector fund, he said, does not mean an investor has stepped away from AI exposure.
The biggest AI mismatch is between demand measured in days and supply measured in years
Jacobs said BlackRock has built an AI value-chain framework that spans power companies, data center real estate, chip manufacturing, data owners, large model developers, the application layer, and the platform layer, covering dozens of companies globally.
He argued that the biggest mismatch in AI today lies in the speed gap between demand and supply. Large models can keep improving around the clock, and companies can decide within days or weeks to increase AI spending. Demand, he said, is exponential. Supply is not.
He gave several examples. A copper mine can take four to eight years to move from development to production. If optical interconnects replace copper interconnects, indium becomes important, but indium is a byproduct of zinc mining and still tied to multi-year mining cycles. Even if the need is simply more GPUs, a semiconductor fab still takes about four years to come online.
His summary was blunt: demand is moving on a daily clock, while supply is moving on a yearly one. That, he said, is the central dislocation in AI right now.
In an editor’s note, TechFlow added that indium is a rare metal used in lasers and optical communication devices, with little standalone mining supply and heavy reliance on zinc refining byproducts. The point, in context, was that changing the technology path does not remove the upstream resource bottleneck.
ETF count in the U.S. now exceeds the number of listed stocks, and names can mislead
On the ETF business itself, Jacobs said the number of ETFs in the U.S. now exceeds the number of listed stocks. He also said 2026 has been another record year for ETF launches and that active ETFs have already surpassed index ETFs in count. More choice, in his view, has made selection harder rather than easier.
“There are now more ETFs in the U.S. than stocks,” he said. “Don’t just look at the name. Names can sound impressive. Open the hood and look at the structure and the market makers. The differences are huge.”
He said BlackRock uses three standards when deciding how far to break a theme into products. First, does the ETF solve a real client need and provide exposure that clients either cannot easily reach or need help defining? Second, is there a positive expected return? Third, can the firm build a high-quality ETF around it? If a sub-theme gets so narrow that only two or three stocks remain, he said, it stops looking like an ETF and becomes just a tiny stock basket.
That logic shapes BlackRock’s AI lineup. Investors who want a simpler route can buy BAI, an actively managed AI ETF run by Tony Kim, who rotates across the value chain. Investors who want to build their own exposure can buy by segment instead, including PWR for power, IDGT for data center real estate, and ICOP for copper miners.
BIDA uses a 1933 Act structure, with a K-1 and what Jacobs called better after-tax efficiency
Jacobs used BIDA to illustrate how product structure can matter. He said BlackRock chose a 1933 Securities Act structure rather than a 1940 Investment Company Act structure for the product. He noted that the 1933 Act format is the one commonly used for Bitcoin and gold ETFs.
The trade-off, he said, is that investors receive a K-1 tax form, which is more cumbersome than a standard 1099 and makes tax filing more complicated. BlackRock still chose that route because, in his words, it offers better after-tax efficiency. He said the firm knew the structure would be more complex and then spent time explaining why it made that choice.
TechFlow’s note added that the “33 Act” and “40 Act” labels refer to registration structures under the U.S. Securities Act of 1933 and the Investment Company Act of 1940. A K-1 is a partnership tax form that is generally more complex than a 1099 and often arrives around mid-March.
Jacobs also said BlackRock does not act as a market maker, but it does think about market-maker needs when designing products. Two ETFs may sound similar by name, he said, yet the one backed by a deeper market-maker ecosystem is likely to trade better in periods of stress and tight liquidity. His advice was simple: do not stop at the label.
Advisors are now serving two generations with different product lists
In the final part of the discussion, Pompliano said data from his own wealth platform shows client assets are still dominated by equities, with about 20% in owner-occupied real estate and only 10% in crypto. He said that differs from the common assumption that crypto-native audiences are overwhelmingly concentrated in digital assets.
Jacobs said that lines up with what BlackRock sees. He framed generational change as a concrete business issue. Millennials, he said, were the first digitally native generation, though social media was not fully native to all of them. Gen Z grew up inside social media. Generation Alpha, in his view, will encounter finance in a way that looks very different from the experience of their parents.
That shift is already showing up in advisory work. Jacobs said advisors increasingly have to serve two generations at once: baby boomers ask about large-cap growth funds, while their children ask about Bitcoin funds. He said one reason IBIT has been so successful is that advisors realized the product list for conversations with two generations is no longer the same, and they need to bridge that gap.
He added that a large transfer of wealth from baby boomers to millennials still lies ahead. Even so, he said the basic principles of portfolio management do not change across generations. The old rules of risk and return still apply. What changes are the tools, the asset classes, and the way advisors communicate with each cohort.
