BlackRock used its heaviest hand in its pursuit of a license for its new type of Bitcoin ETF, which will be based on the spot market rather than futures.
Which one?
Its own CEO, Larry Fink.
As Fink mentioned on yesterday’s Fox Bussines TV show, the role of cryptocurrencies is to digitize gold.
Let’s be clear.
Bitcoin is not based on any currency and so it may represent an asset that people can play as an alternative. Rather than investing in gold as a protection against inflationary pressures, against the difficulties of a single country or currency devaluation. Bitcoin is an international asset that could democratize finance!
We have to admit that we watched the statements with surprise, as his words are reminiscent of Bitcoin maximalists!
Larry Fink not only has the special weight of being the head of the world’s largest asset manager. Some claim that he is the most powerful man in the US.
The one who pulls the financial strings, regardless of who is president or central banker.
As much as politicians rotate in power, the only one who consistently sticks with the winner is Larry Fink.
However, this is not the first time a top BlackRock executive has likened Bitcoin to digital gold.
In November 2020 Rick Rieder, head of fixed income at the world’s largest asset manager, claimed that Bitcoin could replace gold. As he said, its digital form makes it instantly portable and more functional than metal.
I wonder what will happen if BlackRock puts just 0.1% of its nearly $10 trillion under management into Bitcoin?
Bitcoin as a concept was born just 14 years ago. The only people who initially got involved and attempted to implement it were some fringe cryptographers.
And look where it has ended up. Some of the most respected institutional investors, who manage vast pools of wealth, are starting to treat it as an asset comparable, if not better, than gold. The only form of currency that has enjoyed universal appreciation for thousands of years.
Yes, but isn’t volatility a problem?
No, for many it is not troublesome, especially if the time horizon is 4 years. They believe that it is better to achieve significant returns from a volatile but very promising asset, rather than much lower returns from a less volatile one.
BlackRock is not just an institutional investor. Its clients include public pension funds, insurance companies, sovereign wealth funds, other institutional investors and banks, listed companies.
Bitcoin is beginning to be recognized and legitimized in the public consciousness. It is no longer on the margins. Bitcoin ETFs have been created in many countries, major banks have set up entire departments to offer cryptocurrencies to their customers, listed companies have incorporated it into their balance sheets. Even countries were found to adopt it as an official currency. And there’s more to come it seems…
If you were expecting Wall Street to stay out of crypto, just forget it. It’s not going to happen. They’re starting to become aware of its properties, to appreciate its rarity, its potential.
That’s why some are buying it as a long-term investment, others for trading, others are seeing opportunities in terms of custodial services. In one way or another, everyone is getting involved.
BlackRock’s Bitcoin ETF Frenzy
Let’s recall briefly the events from the beginning… of the play, so that we can follow the developments.
It all started with an application for this type of ETF (ETFs are mutual funds that trade during trading as a regular stock) by BlackRock, the world’s largest asset manager.
This was immediately followed by similar requests from other investment giants such as Bitwise, Invesco, Valkyrie, Ark Invest and Fidelity.
With such strong names, the US Securities and Exchange Commission (SEC) found it difficult to deny approval. Indeed, with expectations tilted in favor of a positive outcome, the price of Bitcoin climbed above $31,000 in almost a week.
A few days ago, a Wall Street Journal report, citing well-informed sources, reported that the SEC informed the Nasdaq and Cboe exchanges that the applications lacked the required clarity and completeness.
Immediately everyone’s mind went to the 33 consecutive rejections by the SEC on the grounds that the applications did not meet the criteria for protecting investors from fraud and manipulation. They were not “clear and informative,” they said.
Yet, ETF firms are trying to find ways to address this concern. Nasdaq re-filed Form 19b-4 for the iShares Bitcoin Trust, which will be led by BlackRock.
The day before yesterday another report, this time from Reuters, claimed that similar moves were made by Cboe last week. It said in the filing that it has entered into an agreement with exchange Coinbase, which will jointly take over oversight.
This is the reason why Coinbase (symbol: COIN) shares rose 13% on Monday as we can see in the daily chart (ed. no trades were conducted yesterday due to a holiday). Since the beginning of the year, the value of Coinbase shares has increased 2.5 times.
It is not unlikely that the strong excitement will continue, or at least many people are expecting it and preparing for it. According to research firm Glassnode, options contracts in Bitcoin have increased significantly.
Open interest (the number of contracts still open or pending) recently reached a value of $13.8 billion. Very close to the all-time high of $15.1 billion.
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