After several speculations in the past, the world’s largest investment management company BlackRock has finally ventured into the cryptocurrency industry. Now, the investment manager is betting big on Bitcoin following a new private trust offering launched today and another service being developed in collaboration with Coinbase, the largest US digital currency trading platform.
BlackRock now provides direct exposure to Bitcoin
BlackRock announced its Bitcoin private trust on Thursday, noting that the offering will enable its US-based institutional client direct exposure to spot BTC. The company already offers crypto-related investment products to clients. However, the BTC trust offering will provide the investors direct exposure to the actual market performance or price of the underlying asset in an efficient and cost-effective manner.
The investment manager stated that there is growing interest among institutions to own Bitcoin, hence the offering today. The launch of BlackRock’s Bitcoin private trust comes just a week after the company announced a partnership with Coinbase to provide the clients of its portfolio management software, Aladdin, access to crypto trading and custody services using the Coinbase Prime service.
Despite the steep downturn in the digital asset market,1 we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.
BlackRock.
What crypto is BlackRock investing in?
Right now, BlackRock is betting big on Bitcoin, the largest cryptocurrency by market. The new private trust offering is primarily aimed at providing the company’s institutional clients access to Bitcoin. Additionally, the new crypto service planned with Coinbase for Aladdin common clients will only support Bitcoin at launch.
On the corporate level, BlackRock currently holds or is exposed to Bitcoin, but indirectly through MicroStrategy. As of February 2022, BlackRock owned 613,363 shares or a 7.3% stake in the business intelligence company, which is presently a top public-traded Bitcoin investor. MicroStrategy currently holds 129,699 BTC, an equivalent of $3.1 billion at today’s market price.
In 2021, the investment manager was also exposed to Bitcoin via its Global Allocation fund. According to an SEC filing at the end of March 2021, BlackRock disclosed that its Global Allocation fund held 37 units of bitcoin futures contract from the Chicago Mercantile Exchange (CME). However, those contracts expired on March 26.
The turnaround
BlackRock’s bet on Bitcoin and the cryptocurrency market comes three years after the CEO, Larry Fink, likened the king crypto to an index of money laundering. Fink said that the adoption of the cryptocurrency “just shows you how much demand for money laundering there is in the world.”
There were lots of critic comments from popular and influential investors on Bitcoin in the early years. However, most of the critics have now turned to embracing Bitcoin as the adoption continues to spread globally.
BTC suffered a major loss over the past months amid the bear market. The price dropped significantly in June, making the year’s low around $17.7k. At the moment, crypto prices have started to rebound, and BTC is back trading at over $24.4k, with a market cap of $468 billion.
