BlackRock which oversees $8.7 trillion in funds, is offering clients exposure to cryptocurrency via Bitcoin futures
I feel like a broken tape when I have to keep repeating that the growing institutional interest has taken the premier crypto, Bitcoin, to new highs. It’s just that major players of the legacy financial system keep popping with their support for Bitcoin investment. And the most recent is a big deal too. BlackRock, which is the biggest asset manager in the world with more than 8.7 trillion worth of assets under its belt, has recently announced that it would give its clients the opportunity to explore investing in Bitcoin.
According to the documents filed with the SEC, BlackRock suggested it could use bitcoin derivatives, among other assets, under the BlackRock Strategic Income Opportunities and the BlackRock Global Allocation Fund. It did not specify, however, the commodity exchange it will choose to execute these crypto futures. But considering funds are only permitted to trade cash-settled bitcoin futures, it would probably be done via CME — the only exchange registered with the Commodity Futures Trading Commission (CFTC) to offer such a settlement option.
Although the regulatory filings are not a guarantee that BlackRock will add bitcoin futures to the new funds, it certainly strengthens the narrative that institutional interest continues to grow in the premier digital coin. Ironical, how the legacy incumbents have come around from their antagonistic tone just a couple of years ago — it was only in a 2018 interview when BlackRock CEO Larry Fink called bitcoin an “index of money laundering.”
Similarly, JPMorgan CEO Jamie Dimon who called bitcoin a “fraud" has changed his tone too. In fact, leading analysts at the bank have recently suggested Bitcoin could rise to $146K if it were to match Gold in terms of market capitalization. The change in tone is not surprising, considering a strong and clear demand for the new asset class has emerged among users.
With that in mind, let’s see what’s been happening in Bitcoin price action lately. The crypto kingpin has been in a bearish consolidation since it hit its all-time high, just a little over a couple of weeks ago. At the time of writing this, BTC/USD is trading around $32700 — in sharp contrast to Ethereum, which has charted another ATH of just over $1470, as we speak. Decoupling of cryptos is evident.
Looking at the data from Chainalysis Market Intel, the recent bout of volatility and subdued price action in Bitcoin could be linked to inflows to exchanges that were 30% lower in the last seven days relative to the prior seven days, but exchange bitcoin balances continued to increase. Also, Median trade intensity declined by 5% in the last seven days relative to the prior seven days, indicating that demand fell faster than incoming supply.
Combing data further, it is evident that many new players have entered the Bitcoin market and are driving growth — BTC held for less than 3 months by type of holder suggests that investors were responsible for the growth in such holdings, in particular investors who hold at least 1,000 bitcoin each. These new, large investors hold 40% of the bitcoin held for less than three months, and they increased their holdings by 173% over 2020 (grey line).
For now, at least how it seems, the Alt. coins led by Ethereum might be playing a catching up game with Bitcoin. Keeping my fingers crossed.
Originally Published on Medium