The world's largest asset manager appears to be preparing for a potential Bitcoin investment. BlackRock has filed applications with the Securities and Exchange Commission (SEC) for two of its mutual funds to be enhanced by Bitcoin derivatives.
BlackRock Inc. is the world's largest asset manager with $7.4 trillion in assets under management (AuM). Last week, they filed updated prospectuses for two funds that would allow them to purchase Bitcoin futures, Bloomberg reports. The respective futures will be settled with cash settlement, so the asset itself (Bitcoin), will not be delivered.
Increasing Bitcoin demand at BlackRock
Already a few years ago, CEO Larry Fink was asked about Bitcoin and other cryptocurrencies in an interview. According to Fink, there was simply no demand for the "digital gold" in 2018. Meanwhile, the situation has changed. If the application is approved, diversification into crypto assets will also be possible for BlackRock in the future - a big step given the asset manager's assets under management (AuM).
A month ago, BlackRock CIO Rick Rieder was asked about Bitcoin. Rieder indicated that although he doesn't own any Bitcoins himself, he is optimistic about its future. He also said that there is definitely a “strong demand,” unlike a few years ago. With his statements, the investment manager shares the same sentiment as other influential investors such as Paul Tudor Jones.
Burgeoning institutional interest
Larger institutional Bitcoin investments could be observed sporadically in 2020. In particular, companies directly related to digitalization, such as MicroStrategy or Square, stood out. A month ago, MassMutual became the first insurance company to enter Crypto assets. According to JPMorgan strategists, this was an important milestone. This trend looks set to continue.
Increasing institutional interest, which can also be seen in the example of BlackRock, is often attributed to Bitcoin's extraordinary performance in 2020. The crypto-asset broke through its previous all-time high last year and was able to regain the title of "Best Performing Asset". In the process, it was able to move largely uncorrelated to other asset classes, aside from the March crash. This combination makes Bitcoin an attractive diversification asset.
