CIO of BlackRock Confirms Bitcoin as a Sustainable Asset
- What is BlackRock?
- BlackRock CIO’s latest statement about Bitcoin
- BlackRock's Journey into the Cryptocurrency Market
- Investing in Bitcoin Futures Contract
- More than 300 million USD of Bitcoin mining shares held as revealed
- Preparations to offer direct Bitcoin services to customers?
- BlackRock's "loophole"
What is BlackRock?
BlackRock is the world's largest hedge fund and asset manager, with $5.1 trillion in direct assets under management. For comparison, this figure is larger than the foreign currency reserves of China - the country with the largest foreign currency reserves in the world, and equivalent to the assets of all private funds and hedge funds in the world combined.
In addition, BlackRock also oversees nearly $10 trillion through the Aladdin risk management platform. The assets under management on BlackRock's Aladdin platform represent about 7% of global stocks, bonds and loans.
Therefore, large institutions, money management companies and assets still have to see the financial world through the lens of BlackRock. An estimated 17,000 tellers in banks, insurance companies, mutual funds and other institutions rely on BlackRock's analytical models to make investment decisions.
BlackRock CIO’s latest statement about Bitcoin
In an interview with Yahoo Finance on June 16, BlackRock Chief Investment Officer (CIO) Rick Rieder affirmed that Bitcoin's severe drop is largely due to negative capital pressure moving around BTC.
To make it clearer, we can think that what Rieder means here is that the leveraged cash flow of crypto companies is overused, leading to sudden liquidation and pressure on the Bitcoin price.
Despite the comment, this is the first time that the CIO of the world dominating financial giant has frankly stated that he still has great faith in Bitcoin in particular and crypto in general, that they will play an important role for the broader financial ecosystem in the future.
“You know, we're seeing too much debt in the crypto space. All will soon be removed. Either way, I don't change my mind that Bitcoin is a sustainable asset. This is a long-term business.”
On the other hand, when commenting on Bitcoin's next movement, Rieder was less optimistic, arguing that with the overwhelming selling pressure that is crushing Bitcoin, BTC may be over-liquidated, and will be forced to incur further corrections before a new cyclical rally is formed.
“Basically, from my experience in the field, the current situation is pretty bad for Bitcoin. However, like most asset classes, we can estimate that two to three years from now they will be worth more than they are today.”
BlackRock's Journey into the Cryptocurrency Market
Investing in Bitcoin Futures Contract
According to documents filed with the US Securities and Exchange Commission (SEC) in January 2021, two funds, the BlackRock Global Allocation Fund Inc. and BlackRock Funds V, considered their intention to invest in Bitcoin. Both include the world's oldest cryptocurrency on the list of allowed derivatives.
Until April 2021, BlackRock officially announced that the fund had purchased 6.5 million USD of Bitcoin futures contracts on CME derivatives exchange. The value of these contracts as of the reporting date to the SEC has increased by more than 360,000 USD.
More than 300 million USD of Bitcoin mining shares held as revealed
Then in June 2021, the community discovered that according to the filing submitted to the SEC, BlackRock "silently" owned up to 6.71% of the shares of Marathon Digital Holdings (MARA) and 6.61% of Riot Blockchain (RIOT), the two leading giants in the cryptocurrency mining industry.
Accordingly, the BlackRock iShares Russell 2000 ETF holds more shares in Marathon and Riot than any other ETF. Total investments are worth nearly 384 million USD, of which BlackRock bought MARA for nearly 207 million USD, and Riot for 176 million USD.
Preparations to offer direct Bitcoin services to customers?
This will definitely be what all of us investors look forward to the most. However, the story only stops at the level of BlackRock’s plans. Despite that, there is a high probability that it can still happen if you consider the sequence of actions that BlackRock is building around Bitcoin.
First, BlackRock launched its historic blockchain ETF in April 2022, called the Ishares blockchain tech ETF, which will track the NYSE FactSet Global Blockchain Technology Index (NYFSBLC). The Ishares blockchain tech ETF will seek to track the performance of investments based on the NYFSBLC, including companies inside and outside the United States involved in the development, innovation, and use of blockchain technology and cryptocurrencies.
According to the report, the majority of new ETF investments will be allocated to Coinbase - the largest cryptocurrency exchange in the United States with a share of 11.45%, Bitcoin mining company Marathon Digital Holdings (11.19%) and Riot (10.41%), as well as the "tycoon" of payments, PayPal.
Not only that, just a week after launching the ETF, BlackRock has acted as one of the main investors for Circle's $400 million funding round, and will become the main asset manager for the cash reserves of stablecoin USDC.
After this event, BlackRock CEO Larry Fink himself confirmed that his group is seriously researching cryptocurrencies and stablecoins to prepare for the next important plans for the market.
Many questions are gradually raised as to why it was not until such a difficult time as the present, when the market plummeted heavily, that the CIO BlackRock took action to "reassure" investors and set such high expectations on Bitcoin.
Thus, skepticism immediately arose. Because, in the context of Terra's crisis in May 2022, a series of speculations allege that BlackRock and Citadel are the two funds behind short selling LUNA through a huge loan of 100,000 Bitcoin on Gemini, even though after that, BlackRock immediately corrected the completely unfounded rumors.
- Case 1: Anyway, only insiders know the truth. But if we hypothesize that the opposite is true, BlackRock has taken home a huge profit through its LUNA short position, and at the same time, created a wave of fear for the market, pushed the Bitcoin price lower, then used all the profits just earned to "collect" BTC -> beneficial to the Bitcoin price in the long term.
- Case 2: If the rumor is not true, then the statement from the BlackRock CIO, combined with the events mentioned in the article, is enough to prove so far that, perhaps, through many storms from many other factors, Bitcoin still exists and has convinced BlackRock. And with the confirmation of support from senior leaders such as Rick Rieder or CEO Larry Fink, Bitcoin is facing the opportunity to receive a large inflow of money, nearly 10 trillion USD, from the asset management fund -> leading to the era of widespread acceptance.
With all the analyzed data, the BHO Network team hopes to help investors have a more optimistic view after the recent market's gloomy journey, to continue to have more motivation to continue accompanying the crypto industry in the future.
Published on June 22, 2022
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