On January 20th, BlackRock, the world’s largest asset manager with more than $ 8.7 trillion in assets under managementappeared to have given two of its partner funds, BlackRock Global Allocation Fund Inc. and BlackRock Funds, the green light to invest in Bitcoin futures.
In that regard, the documents in the prospectuses filed with the United States Securities Commission suggest that BlackRock wants to try bitcoin (BTC), especially since the first cryptocurrency in history was added to the company’s list of derivatives.
Even in the last few months Company executives have spoken positively about Bitcoin, suggesting that in the near future, various institutions could turn to digital assets to expand their list of financial offerings.
For example, Rick Rieder, Chief Investment Officer at BlackRock, said so in an interview last November Bitcoin has the potential to “largely replace gold”. The company’s CEO, Larry Fink, made a similar statement. by telling the media that Bitcoin has caught the attention of the masses and has the potential to potentially develop into its own global market.
Finally, it is worth recalling that exactly a month ago BlackRock posted a job advertisement seeking a qualified person to serve as the vice president and blockchain head for its New York office. According to the announcement, applicants for the role needed to be able to develop and implement various strategies can help “drive demand for enterprise technology investments and offerings”.
What does BlackRock’s entry mean?
For BlackRock, investing in Bitcoin futures is an important step for the global cryptocurrency ecosystem as Bitcoin gains tremendous credibility as a new asset class. Jason Lau, COO of the OKCoin exchange, told Cointelegraph that this move will lay the foundation for other wealth managers Most traditional money managers tend to be “consensus supporters”.and added:
“With the BlackRock announcement, other asset managers can draw attention to BlackRock’s work in convincing its investment committees and client investment councils of the potential and maturity of BTC and the cryptocurrency ecosystem.”
Currently, CME futures and investment trust stocks from Grayscale and Bitwise are two of the primary tools for institutions to delve into cryptocurrencies. Because of this serious limitation There were high premiums from trusts up to the underlying price of BTC. For example, Lau stated that during the recent BTC price spike in December, Grayscale had a 40% premium over Bitcoin’s underlying value.
Kyle Samani, managing partner at Multicoin Capital – an investment firm – told Cointelegraph that BlackRock’s entry is a huge step forward for the entire industry. He believes he will allow more investors to join the space by letting some of his funds flow into BTC for a long time.
Is BlackRock late for the party?
While some are excited to hear that BlackRock has found its way into the crypto market, Maksim Balashevich, founder and CEO of Santiment – a market intelligence platform for cryptocurrencies – told Cointelegraph that from a “behavioral analysis” perspective Don’t just consider the big headlines.
Instead, the reaction of the masses could be more decisive, which is usually the most important factor in the movement of market prices. And he added: “The entry of BlackRock is not a special event, but another” late arrival “of the” big money “funds. The move will have no effect other than further professionalization that increases the liquidity of the market.”
When asked about the impact BlackRock’s entry could have on the possible stabilization of Bitcoin value, Balashevich noted that cryptocurrency volatility will continue despite these “big strides” and that many will follow. Further ups and downs in the coming months. “”Players like BlackRock are sharks who play with each other“said.
Ultimately, he believes that whether the saturation point in terms of institutional entry into this area is getting closer that the industry actually “get very close to the top” and the “There aren’t too many big players left to hit the market.“”
Could an SEC-approved Bitcoin ETF be in sight?
In the past, the SEC has rejected a number of ETF proposals such as those made by Phoenix Wilshire, Gemini, etc., highlighting price manipulation, lack of liquidity, and sources of price indexing as primary concerns. However, with BlackRock’s foray into this area, it appears that the conditions for ETF approval could be in place sometime in 2021, as Lau noted:
“More and more big reputable financial firms like BlackRock, Guggenheim, SkyBridge, etc. are entering the cryptocurrency space and giving their mark of approval. This can give the regulator more confidence in the maturing of the cryptocurrency market and the need for an ETF to gain more access to cryptocurrencies.”
He noted that it will be extremely interesting to see if the BlackRock iShares ETF business decides to be the first major driver to recognize this fast-opening window of opportunity and introduce an ETF itself. The investment management company VanEck recently filed a new application with the SEC to set up a new Bitcoin ETF. This move was followed by another similar request from Valkyrie Investments. In order to, After a short break, the ETF race has reopened.
With Bitcoin recently crossing the $ 42,000 threshold, various Wall Street institutions appear to be moving rapidly towards the cryptocurrency sector.This shows the fact that MassMutual recently became the youngest big name in traditional finance to acquire more than $ 100 million in BTC.
Not only that, Several high profile investors like Paul Tudor Jones and Stanley Printmiller have recently moved closer to this relatively new asset class.At the corporate level, companies like Square and PayPal have bought bitcoin.