BlackRock (Assets Under Management $7.4 Trillion) CEO: Bitcoin Has Caught Our Attention
Larry Fink believes Bitcoin may evolve into a global market. BlackRock (Assets Under Management $7.4 Trillion) CEO: Bitcoin Has Caught Our Attention
Blackrock CEO Larry Fink says Bitcoin (BTC) is on his company’s radar following the cryptocurrency’s rapid appreciation over the past few months.
Speaking Tuesday at the Council on Foreign Relations alongside former Bank of England governor Mark Carney, Fink reportedly said:
“Bitcoin has caught the attention and the imagination of many people. Still untested, pretty small relative to other markets.”
He Then Added:
“Can it evolve into a global market? Possibly.”
Fink isn’t the only BlackRock executive touting Bitcoin’s potential value. Last month, the company’s chief investment officer, Rick Rieder, told CNBC that not only is Bitcoin “here to stay” but that it will “take the place of gold to a large extent.”
Previously, comments like these would have been considered highly irregular coming from institutional brass, not to mention the world’s largest asset manager with assets under management north of $7.4 trillion as of 2019.
But the public’s perception of Bitcoin has changed dramatically over the past year. Record inflows into Grayscale products, the growth of Bitcoin corporate treasuries, and Guggenheim’s Securities and Exchange Commission amendment to gain exposure to BTC represent a seismic shift in institutional adoption.
Beyond these moves, investment legends Paul Tudor Jones and Stanley Druckenmiller are also backing Bitcoin.
Institutional demand for Bitcoin has created an alarming shortage in the market, with the likes of PayPal and Cash App scooping up most, if not all, newly mined BTC. PayPal alone is buying up almost 70% of the new supply, according to Pantera Capital.
Currently, only 900 BTC is mined each day. With demand increasing following the deflationary May halving, prices are likely to continue higher. Even Citibank has predicted a comparatively astronomical Bitcoin price by the end of 2021.
Although BlackRock doesn’t outright own Bitcoin, it has indirect exposure to the asset through MicroStrategy, a business intelligence firm that converted its balance sheet to BTC. BlackRock is the largest MicroStrategy investor with a 15.2% stake in the company.
BlackRock Seeks VP Blockchain Lead To ‘Drive Demand’ For Firm’s Crypto Offerings
The world’s largest asset manager, BlackRock, is seeking to hire a vice president to help build and execute strategies and “drive demand” for the company’s crypto and crypto-related offerings.
* BlackRock, which has $6.84 trillion assets under management, has posted a job vacancy for a New York-based VP of blockchain to help with the valuation of crypto assets.
* According to the post, the applicant must have at least a year’s experience in the technological foundations of blockchain technology including cryptographic hash functions, distributed network consensus mechanisms, and public-private key cryptography.
* Candidates should be able to “devise and articulate fundamental valuation methodologies for crypto-assets; evaluate game theory and decentralizing governance models associated with blockchain technology,” said the listing.
* BlackRock CEO Larry Fink recently made some bullish comments on bitcoin (BTC, +1.15%), stating it has “caught the attention” of many people and that the nascent cryptocurrency asset class can possibly “evolve” into a global market asset.
BlackRock Files To Add Bitcoin Futures To Two Of Its Funds
BlackRock Inc. is adding cash-settled Bitcoin futures as an eligible investment to two funds, according to regulatory filings.
The world’s largest asset manager filed updated prospectuses for two funds on Wednesday with the U.S. Securities and Exchange Commission that included cash-settled Bitcoin futures among the assets they can buy.
The funds where the exposure could be added are BlackRock Strategic Income Opportunities and BlackRock Global Allocation Fund Inc.
A BlackRock spokesperson declined to comment beyond the filing.
Blackrock CEO Calls Bitcoin An Untested Asset In A ‘Very Small Market’
Larry Fink said he was fascinated with the media hype surrounding Bitcoin but expressed concerns about the crypto asset’s volatility and market size.
Just one week after asset manager Blackrock appeared to be preparing to invest in Bitcoin futures, CEO Larry Fink has some mixed messages on crypto.
In an interview with Bloomberg on Wednesday, Fink referred to Bitcoin (BTC) as a volatile asset within “a very small market.” The CEO’s remarks continued, with fascination over the media coverage of Bitcoin, given that the “asset category is so small compared to other asset categories.”
“[Bitcoin] could be another store of wealth, but right now it’s still untested,” said Fink. “It has huge volatility, moving in 5-6% increments with small dollar investments moving it.”
“It has not been proven yet on the long-term viability of it. Some form of a digitized currency is going to play a bigger role in the future, and it may be Bitcoin. It may be something else that has developed.”
Other executives at the investment manager have made seemingly more bullish remarks. In November 2020, Blackrock chief investment officer Rick Rieder said “Bitcoin is here to stay” and the crypto asset would likely “take the place of gold to a large extent.”
BlackRock has indirect exposure to Bitcoin through its ownership stake in business intelligence firm MicroStrategy. The company made an initial $425 million investment in the crypto asset in summer 2020 and has since added thousands more BTC to its holdings.
However, Blackrock may be exploring the possibility of getting more directly involved in the crypto space. Last Wednesday, a pair of prospectus filings for two of Blackrock’s funds appeared on the website for the United States Securities and Exchange Commission. Both mentioned potentially using Bitcoin derivatives and other assets as part of its investment scheme, but neither was definitive about the investment firm’s entry into the Bitcoin futures market.
At the time of publication, the price of Bitcoin is $30,734, having fallen 4% in the last 24 hours.
BlackRock’s Entry Reflects A Change In Institutional Outlook On Crypto
The entry of the world’s largest asset manager into the realm of crypto finance could potentially signal the entry of other big-name players.
On Jan. 20, BlackRock, the world’s largest asset manager with over $8.7 trillion assets under management, appeared to have given the green light to two of its associated funds, BlackRock Global Allocation Fund Inc. and BlackRock Funds, to invest in Bitcoin futures.
In this regard, the prospectus documents filed with the United States Securities and Exchange Commission suggest that BlackRock is looking to dabble in Bitcoin (BTC), especially as the first ever cryptocurrency has been added to the company’s lists of derivative products cleared for use.
Furthermore, over the last few months, the company’s executive brass had spoken positively about Bitcoin, alluding to the fact that in the near future, a number of institutions may look toward digital assets to expand their list of financial offerings.
For example, in an interview last November, Rick Rieder, chief investment officer of BlackRock, said that Bitcoin has the potential to “take the place of gold to a large extent.” A somewhat similar sentiment was echoed by the company’s CEO, Larry Fink, who told the media that Bitcoin has caught the attention of the masses and has the potential to possibly evolve into a global market of its own.
Lastly, it’s also worth remembering that exactly one month ago, BlackRock posted a job advert seeking a qualified individual for the role of vice president, blockchain lead for its New York office. According to the post, the role required applicants to be able to devise and set in motion various strategies that can help “drive demand for the firm’s investments and technology offerings.”
What Does Blackrock’s Entry Mean For The Market?
BlackRock investing in Bitcoin futures is a significant step forward for the global crypto ecosystem, as it brings tremendous credibility to Bitcoin 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 to follow since most traditional asset managers are typically “consensus followers,” adding:
“With BlackRock’s announcement, other asset managers are going to be able to point to BlackRock’s work in convincing their investment committees and the client investment boards about the potential and maturity of BTC and the crypto ecosystem.”
Currently, CME futures and investments trust shares issued by Grayscale and Bitwise are two of the primary vehicles for institutions to get involved with crypto. However, due to this severe limitation, there have been large premiums from trusts versus the underlying price of BTC. For example, Lau stated that during the recent BTC price appreciation in December, Grayscale had a 40% premium on Bitcoin’s underlying value.
Kyle Samani, a managing partner at Multicoin Capital — a thesis-driven investment firm — told Cointelegraph that BlackRock’s entry is a big step forward for the entire industry. He believes that by enabling some of its funds to go long on BTC, it will allow more investors to join the space.
Is Blackrock Late To The Party?
While some are rejoicing at the news of BlackRock making its way into the crypto market, Maksim Balashevich, founder and CEO of Santiment — a market intelligence platform for cryptocurrencies — told Cointelegraph that from a purely “behavior analyses” standpoint, it’s not just the big headlines that should be considered.
Instead, the reaction of the masses, which, more often than not, is the single most crucial factor that determines market price action, could be more decisive. He added: “BlackRock’s entry is no special event but just yet another ‘latecomer’ from ‘big money’ funds. The move won’t have any implications except further professionalizing, increasing the liquidity of the market.”
When asked about the impact BlackRock’s entry may have on Bitcoin’s potential value stabilization, Balashevich pointed out that despite these “big moves,” crypto volatility is here to stay and that many more ups and downs will happen in the coming months. “Players like BlackRock are sharks playing against each other,” he said.
Lastly, on the subject of whether the point of saturation in terms of institutional entry into this space is getting closer, he believes that the industry is indeed “getting very close to the top” and that “there aren’t too many big players left to enter the market.”
Could An SEC-Approved Bitcoin ETF Be On The Horizon?
Historically, the SEC has rejected a number of ETF proposals — such as those submitted by Phoenix Wilshire, Gemini, etc. — sighting price manipulation, lack of liquidity and price indexing sources as key concerns. However, with BlackRock making inroads into this space, it seems as though the stage may finally be set for an ETF being approved sometime in 2021, as Lau pointed out:
“An increasing number of large reputable financial firms a la BlackRock, Guggenheim, SkyBridge, etc. are entering the crypto space and lending their sign of approval. This may give the regulatory body more confidence in the maturation of the crypto market and the need for an ETF to give further access to crypto.”
He pointed out that it will be extremely interesting to see if BlackRock’s ETF business, iShares, decides to become the first major mover to recognize this fast-opening window of opportunity and file for an ETF itself. Recently, investment management firm VanEck has once again submitted an application with the SEC to create a new Bitcoin ETF. This move was followed by another similar application submitted by Valkyrie Investments. So the ETF race is back on following a brief period of calm.
Also, with Bitcoin recently scaling past the $42,000 threshold, it appears as though a number of Wall Street institutions are quickly warming up to the crypto industry, as is highlighted by the fact that MassMutual recently became the latest big-name player from the realm of traditional finance to acquire $100+ million worth of BTC.
Not only that, a number of high-profile investors such as Paul Tudor Jones and Stanley Druckenmiller have cozied up to this relatively new asset class in recent times and from the corporate domain, companies such as Square and PayPal have purchased Bitcoin.
BlackRock Has Started To ‘Dabble’ In Crypto, Says CIO
“Holding some portion of what you hold in cash in things like crypto seems to make some sense to me,” said Rick Rieder.
Rick Rieder, chief investment officer at BlackRock Financial Management, hinted that the firm ha already invested a percentage of its portfolio into crypto.
In an interview with CNBC’s Squawk Box on Wednesday, Rieder said BlackRock — with more than $8.6 trillion in assets under management — has “started to dabble a bit” into crypto investments.
The chief investment officer described the volatility of cryptocurrencies like Bitcoin (BTC) as “extraordinary” but acknowledged that many investors were looking for “places that appreciate under the assumption that inflation moves higher as debts are building.”
“Holding some portion of what you hold in cash in things like crypto seems to make some sense to me, but I wouldn’t espouse a certain allocation or target holding,” said Reider. “My sense is the technology has evolved and the regulations have evolved to the point where a number of people find it should be part of the portfolio.”
Rieder did not specify what percentage of BlackRock’s assets under management may be in crypto, but his comments come following the multitrillion-dollar asset manager mentioning Bitcoin in two prospectus filings with the United States Securities and Exchange Commission. The filings suggest the possibility of BlackRock using Bitcoin derivatives and other assets as part of its investment scheme.
Executives at the asset management firm have spoken positively about crypto in recent months. Rieder previously said that Bitcoin has the potential to “take the place of gold to a large extent,” while in December 2020, CEO Larry Fink said Bitcoin caught his attention and could possibly evolve into a global market.
The chief investment officer’s recent remarks follow Tesla making a $1.5-billion Bitcoin purchase earlier this month, prompting many firms to face questions about if they’ll consider investing in the crypto asset.
Microsoft and General Motors have both said they have no immediate plans to put Bitcoin on their balance sheets, while Amsterdam-based payment processor Adyen did not rule out the possibility.