America’s largest asset manager BlackRock (BLK) wants to invest in the Bitcoin (BTC) market.
Specifically, BlackRock is trying to register an iShares Bitcoin Trust with the US Securities and Exchange Commission (SEC). “The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust,” the 15 June 2023 SEC filing states. “The Trust seeks to reflect generally the performance of the price of bitcoin.”*
The trust is interesting because it will be the first US exchange-traded fund (ETF) dedicated to one cryptocurrency (Bitcoin). Coinbase (COIN) will hold the Bitcoin and the Bank of New York Mellon (BK) will hold US dollars for the Trust. BlackRock Fund Adivsors will serve as the Trustee and Administer the Fund. However, Bitcoin will be the Trust’s primary asset.
If the SEC approves the Trust its shares will trade on the NASDAQ exchange. The SEC filing lists no ticker symbol for the Trust. This Trust will use the Chicago Mercantile Exchange (CME) CF Bitcoin Reference Rate/New York Dollar Trading pair or CF Benchmarks Index to determine Bitcoin’s price performance.
The filing does not say how much Bitcoin the Trust will hold. However, it states that iShares Bitcoin Trust will issue blocks or baskets of 40,000 shares.
Can BlackRock take Bitcoin Mainstream?
BlackRock (BLK) can take take Bitcoin (BTC) and cryptocurrency mainstream because it is America’s largest fund manager and ETF company.
For example, BlackRock offered 393 ETFs in the United States that contained $2.23 trillions in assets under management (AUM) in May 2023, Investopedia estimates. BlackRock’s iShares ETFs generated $3.74 billion in revenues in May 2023. BlackRock’s ETFs had a three-month fund flow of $65.5 billion in May 2023.*
BlackRock was also America’s largest fund manager with $9.09 trillion in AUM in June 2023, The Sovereign Wealth Fund Institute estimates. Those assets could grow because Morgan Stanley analysts speculate BlackRock’s AUM could grow to over $15 trillion by 2028, Bloomberg reports.* Thus, BlackRock could inject enormous amounts of money into Bitcoin.
BlackRcok can offer Bitcoin to a mainstream market because it claims 120 million people invest in iShares ETFs. Interestingly, BlackRock claims to offer over 1,250 exchange-traded funds around the world.*
This could boost other crypto. Particularly, if BlackRock launches Ethereum (ETH) or Binance (BNB) ETFs. Interestingly, BlackRock offers an iShares Blockchain and Tech ETF (IBLC) that owns shares of blockchain companies. Hence, BlackRock is already taking blockchain mainstream.
Why is BlackRock investing in Bitcoin (BTC)?
It is easy to see why BlackRock is investing in Bitcoin (BTC). Bitcoin is the largest cryptocurrency. It had a $30,594.56 Coin Price, a $594.08 billion Market Cap, a $15.25 billion 24-Hour Market Volume, and a $642.529 billion Fully Diluted Market Cap on 1 July 2023. iShares managers also want to cash in on the $1.2 trillion cryptocurrency market.
Hence, BlackRock’s fund managers want to cash in on Bitcoin’s success. Those fund managers also want to tap jittery investors who are afraid of other assets such as stocks and the US dollar.
In particular, all the fears about the decline of the US dollar, the weaknesses of major currencies such as the Chinese yuan, and fears that economies such as Britain could collapse. Plus, many people are afraid of banks and stock markets because of recent events such as the Silicon Valley Bank collapse and stock sell offs.
Fears of the debt ceiling and political unrest in the United States are scaring people away from the bond market. Oil and other commodity prices have been falling because of the Ukraine War.
In times of economic uncertainty, such as now, some investors turn to hard commodities such as gold. Many people view Bitcoin (BTC) as such an asset. Thus, BlackRock is trying to attract such investors.
Will the SEC Approve BlackRock’s Bitcoin (BTC) ETF?
It is hard to tell if the SEC will approve the iShares Bitcoin Trust. SEC officials, including Chair Gary Gensler have been hostile to crypto.
However, the SEC is under political pressure to protect Bitcoin (BTC). In particular, Bitcoin is popular with some Republican voters in the United States. Bitcoin is also winning favor among the working class which scares Wall Street. Moreover, BlackRock is powerful and politically connected. BlackRock has friends in Congress who can protect it from the SEC.
My prediction is that the SEC will approve the iShares Bitcoin Trust. Approving the Trust will allow Gensler to pose as a friend of crypto. Thus, financial advisers will be able to earn commissions on a Bitcoin (BTC) investment. However, the Trust will not be a be better investment than owning actual Bitcoin.
Yet, the Trust’s existence could boost Bitcoin prices as fund managers buy BTC. More importantly, the Trust’s existence will establish Bitcoin and cryptocurrencies as viable investments. Speculators need to watch the iShares Bitcoin Trust carefully, because it shows that Big Finance now believes in crypto.
*https://www.sec.gov/Archives/edgar/data/1980994/000143774923017574/bit20230608_s1.htm
*https://www.investopedia.com/articles/investing/080415/5-biggest-etf-companies.asp
*https://www.swfinstitute.org/fund-manager-rankings/asset-manager
*https://www.bloomberg.com/news/articles/2023-04-17/blackrock-assets-to-top-15-trillion-in-five-years-analyst-says#xj4y7vzkg
*https://www.ishares.com/us/about-us/who-we-are#dominik-rohe
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