On January 20, BlackRock, the world’s largest asset manager with over $ 8.7 trillion in assets under management, appeared to have given two of its associate funds, BlackRock Global Allocation Fund Inc. and BlackRock Funds, the green light to move into Bitcoin Investing Futures.
In this regard, prospectus documents filed with the U.S. Securities and Exchange Commission suggest BlackRock is trying to get into Bitcoin (BTC), especially as the company’s list of derivatives that have been cleared for use is around the first cryptocurrency was expanded.
Additionally, the company’s senior management had spoken positively about Bitcoin for the past few months, suggesting that in the near future, a number of institutions may be turning to digital assets to expand their list of financial offerings.
For example, Rick Rieder, BlackRock’s chief investment officer, said in an interview last November that Bitcoin has the potential to “largely replace gold”. A somewhat similar sentiment was confirmed by the company’s CEO, Larry Fink, who told the media that Bitcoin had caught mass attention and had the potential to potentially develop into its own global market.
Finally, it is worth remembering that exactly one month ago BlackRock posted a job advertisement seeking a qualified person for the role of Vice President, Blockchain Lead for its New York office. According to the post, applicants needed to be able to develop and initiate a variety of strategies that can help “drive demand for the company’s investment and technology offerings”.
What does BlackRock’s entry mean for the market?
BlackRock’s investment in Bitcoin futures is a significant advancement for the global crypto ecosystem as Bitcoin gains tremendous credibility as a new asset class. Jason Lau, chief operating officer of Cryptocurrency Exchange OKCoin, told Cointelegraph that this move will set the stage for other asset managers as most traditional asset managers are typically “consensus followers,” adding:
“With the BlackRock announcement, other asset managers can refer to BlackRock’s work in convincing their investment committees and client investment boards of the potential and maturity of BTC and the crypto ecosystem.”
Currently, CME futures and investment trust stocks issued by Grayscale and Bitwise are two of the most important tools for institutions to get into crypto. However, because of this severe limitation, there were high premiums from trusts over the underlying price of BTC. For example, Lau stated that during the recent BTC price spike in December, Grayscale had a 40% premium on the underlying value of Bitcoin.
Kyle Samani, managing partner at Multicoin Capital – a thesis-driven investment firm – told Cointelegraph that BlackRock’s entry is a huge step forward for the entire industry. He believes that by allowing some of his funds to run for a long time to BTC, more investors can step into the space.
Is BlackRock late for the party?
While some are excited to hear that BlackRock has made its way into the crypto market, Maksim Balashevich, founder and CEO of Santiment – a cryptocurrency market research platform – told Cointelegraph that it is not just a big behavioral analysis that takes headlines into account should be.
Instead, the reaction of the masses, which is mostly the single most important factor in market price movement, could be more decisive. He added, “BlackRock’s entry is not a special event, just another“ latecomer ”from“ big money ”funds. The move will have no impact other than further professionalization that will increase the liquidity of the market. “
When asked about the impact BlackRock’s entry could have on the potential stabilization of Bitcoin’s value, Balashevich pointed out that crypto volatility will persist despite these “big strides” and that there will be many more ups and downs in the coming months Lows will occur. “Players like BlackRock are sharks who play against each other,” he said.
Finally, on the question of whether the point of saturation is approaching with regard to institutional entry into this area, he finally believes that the industry is actually “getting very close to the top” and that “there aren’t too many big players left in the market enter. “
Could an SEC-approved Bitcoin ETF be in sight?
In the past, the SEC has rejected a number of ETF proposals – such as those from Phoenix Wilshire, Gemini, etc. – that viewed price manipulation, lack of liquidity and sources of price indexing as primary concerns. However, with BlackRock venturing into this area, it seems like the conditions for an ETF to be approved in 2021 can finally be created, as Lau pointed out:
“More and more big reputable financial companies like BlackRock, Guggenheim, SkyBridge etc. are entering the crypto room and awarding their approval mark. This could give the regulator more confidence in the maturation of the crypto market and the need for an ETF to allow further access to crypto. “
He pointed out that it will be extremely interesting to see if BlackRock’s ETF business, iShares, decides to be the first major pacemaker to recognize this fast-opening window of opportunity and apply for an ETF itself. The investment management firm VanEck recently filed another application with the SEC to launch a new Bitcoin ETF. This step was followed by another similar application from Valkyrie Investments. So the ETF race has reopened after a short period of calm.
With Bitcoin recently crossing the $ 42,000 threshold, it seems like a number of Wall Street institutions are quickly warming to the crypto industry, underscored by the fact that MassMutual has recently become the newest known player in the field of became traditional funding to acquire over $ 100 million worth of BTC.
Additionally, a number of high-profile investors like Paul Tudor Jones and Stanley Druckermiller have recently adjusted to this relatively new asset class, and companies like Square and PayPal have bought corporate bitcoin.