Decrypting the New Bitcoin Whale: BlackRock

Original title: "The New Bitcoin Whale: BlackRock"

Original Author: Huohuo, Vernacular Blockchain

According to news on March 21, BlackRock announced that it will launch the first tokenized fund BUIDL on Ethereum. This move will directly bring RWA (Real World Asset, which refers to the tokenization of real world assets through blockchain technology) track. The heat is soaring.

However, this is not the first time BlackRock has stirred up the encryption market. As early as January, BlackRock took the lead in promoting the long-awaited Bitcoin spot trading in the industry. The fund (ETF) became a sensation, and then the entire crypto market started a new round of craze. The price of Bitcoin, which had been low for more than a year, began to break through the US$40,000 mark.

It is expected that BlackRock will penetrate deeper into the encryption industry and become a decisive force in the future.As the world’s largest asset management institution, why Interested in cryptocurrency? What impact will it have on the subsequent development of the encryption industry? Let’s take a closer look at this new Bitcoin whale in the crypto industry.

01. Who is BlackRock?

BlackRock, English name BlackRock, was founded in 1988 and is currently the world's largest asset management, risk mitigation and consulting company .

BlackRock currently has 89 offices in 38 countries around the world, with more than 16,000 employees and clients in more than 100 countries. At the same time, BlackRock holds stocks in 4,973 companies, including: Apple, Microsoft, Nvidia, Amazon, Facebook, Tesla, Exxon Mobil, etc.

BlackRock Top Equity Holdings, as of August 2023, Source : startuptalky

In terms of revenue,In 2023, BlackRock’s revenue totaled $17.86 billion, with the largest portion ($14.4 billion) Sources include investment consulting, management fees and securities lending. The largest contributor regionally is the Americaswith $11.9 billion in revenue in 2023. Overall, financial advisory and management fees make up the bulk of the company's revenue, with US companies accounting for the majority of the company's revenue.

Source: https://in.tradingview.com

According to relevant reports, BlackRock’s assets under management reached US$10 trillion in the fourth quarter of 2023. It can be said that even without the launch of a Bitcoin spot ETF, as a global A towering tree in the financial industry, BlackRock is also firmly in the top spot. So why did BlackRock get into crypto? Is it a normal expansion of one’s own development? Or is it because BlackRock sees the potential of Bitcoin and its ability to hedge traditional financial risks? Or does BlackRock think this is a good addition to their portfolio?

02. BlackRock’s Crypto Action

In fact, BlackRock has become interested in the encryption industry and blockchain technology as early as the past few years, but there were many challenges at that time. Firstly, the market volatility is relatively high. Secondly, there is a lack of reasonable supervision. Market rules have not been fully established. Moreover, in the past ten years, the SEC has been rejecting applications for spot Bitcoin ETFs due to concerns about market manipulation. Therefore, No obvious big moves were made.

However, on January 11, 2024, a number of institutions led by BlackRock launched the first batch of Bitcoin spot ETFs in the United States, called iShares Bitcoin Bitcoin Trust (IBIT) has directly reversed the embarrassing situation of being rejected for spot Bitcoin ETF applications in the past ten years and opened a new chapter in the development of cryptography.

1) One of the biggest promoters of the approval of Bitcoin spot ETF

BlackRock It is an organization with a large number of ETF approval records. According to foreign media reports, the company has 575/675 applications approved by the SEC. It can be said that the success rate is nearly 100%. Only one ETF was rejected in October 2014. The reason given by the SEC for rejecting the actively managed ETF jointly submitted by BlackRock and Precidian Investments was the lack of transparency in earnings.

However, in the face of the SEC, which has rejected the Bitcoin spot ETF for ten years, BlackRock has made sufficient preparations in the application in order to improve the pass rate. In 2023 On June 15, 2019, BlackRock proposed solutions to the SEC's concerns one by one when submitting its application for a spot Bitcoin ETF. For example, in order to meet the SEC's requirements for implementing effective monitoring measures to prevent market manipulation, BlackRock plans to enter into regulatory sharing agreements with relevant well-known platforms and list Coinbase as the custodian of the proposed ETF to ensure the safe management of Bitcoin.

Due to BlackRock’s participation and reputation, many investment/asset management institutions joined the application competition, such as Fidelity, Invesco, VanEck, Cathie Wood’s Ark Investment Management, WisdomTree and many other financial firms followed suit, with most listing Coinbase as an ETF custody provider.

Unfortunately, on June 30, the SEC stated that the documents filed by BlackRock, Fidelity, and others lacked clarity and comprehensiveness. Application for Bitcoin spot ETF rejected. A few days later, BlackRock resubmitted its application. Generally speaking, the SEC’s decision-making time for Bitcoin spot ETF applications is a maximum of 240 days in total. Although there may be lengthy exchanges and discussions, the application has not been flatly rejected as in the past, setting the stage for possible approval in the future. Comes hope, seen as a positive sign of progress.

And based on predictions at the time, based on the publication time of each ETF application’s rule change document in the Federal Register, Tokeninsight predicted that 8 institutional ETFs may be approved. The batch time is as follows:

Facts have proved that according to the earliest predicted time, in In the early morning of January 11, the SEC announced that it had officially approved 11 spot Bitcoin ETFs, including BlackRock.

After the news was released, Bitcoin surged higher for a short time, rising to more than 49,000 US dollars. After that, Bitcoin also started a spiral upward process. As of now, in less than three months, Bitcoin has topped $71,000.

In fact, as early as the beginning of BlackRock’s application for a Bitcoin spot ETF, the market started a positive cheering mode with prices. Bitcoin successively exceeded US$30,000 and US$40,000 in October 2023, and reached US$45,000 after the application was approved.

Bitcoin trend over the past year

And because 5 of the Bitcoin spot ETF companies that applied for issuance chose CEX Coinbase as their custodian, the price of Coinbase has also risen from US$70 in October 2023 to a maximum of US$187 in December. Dollar.

coinbase Token price trend in 2023

According to ChainCatcher news on March 24, since its debut on January 11, 2024, new spot Bitcoin ETFs (excluding GBTC) have significantly increased their Bitcoin holdings, with nine new spot Bitcoins The ETF (excluding Grayscale GBTC) currently holds 474,363.55 BTC. Among them, BlackRock IBIT leads the way with 242,829.94 BTC holdings. One reserve makes IBIT a giant among its peers, accounting for 51.19% of the total holdings of these nine companies. When GBTC is considered along with these 9 BTC, the total rises to 824,615.55 BTC, which is approximately 3.92% of the Bitcoin cap.

According to Cointelegraph’s news analysis on March 25, assuming there are no drastic changes in current capital flows, the number of Bitcoins in BlackRock’s Spot Bitcoin ETF may increase in the future. GBTC surpassed crypto asset manager Grayscale in three weeks.

Although market predictions are in the short term, the approval of the Bitcoin spot ETF The stimulating effect on the market may not be obvious,but in the long term, its existence will significantly enhance the compliance and investability of digital assets, thereby improving market depth and liquidity, and will also help reduce market volatility , enhance investor confidence.

Overall, the reputation and influence of the world's largest asset management company, as well as its expertise in launching and managing ETFs and Experience has convinced the SEC and the market of the feasibility and value of Bitcoin ETFs, and BlackRock has had a huge impact on the crypto world. Next, we will take stock of the fact that it has already made many investments and preparations in the encryption field.

2) The major shareholder of the company with the largest Bitcoin holding

In Bei Within Ryder’s cryptocurrency portfolio, it holds a 5.53% stake in MicroStrategy. MicroStrategy, a business intelligence and software company, is currently the largest Bitcoin holder. BlackRock acquired shares of MicroStrategythrough its various funds and ETFs, such as the iShares Core SP 500 ETF, iShares ESG Aware US Aggregate Bond ETF, and iShares Russell 1000 Growth ETF.

MicroStrategy currently has approximately more than 120,000 Bitcoins worth more than $5 billion and has issued more than $2 billion in debt to fund its Bitcoin purchases. BlackRock’s stake in MicroStrategy is equivalent to owning more than 6,600 Bitcoins and is worth more than $300 million, according to a recent analysis by Forbes . This makes BlackRock one of the largest institutional holders of Bitcoin, although it does not directly own any Bitcoin. BlackRock’s stake in MicroStrategy also reflects its optimistic outlook and confidence in the company and in Bitcoin.

3) US$384 million investment in leading Bitcoin mining company

BlackRock invested $384 million in the Bitcoin mining company in August 2023 as part of its strategy to explore the potential impact of digital currencies on the global economy.

BlackRock has invested in four Bitcoin mining companies, all of which are currently the largest and most mature Bitcoin block production companies, namely Marathon Digital Holdings, Riot Blockchain, Bitfarms and Hut 8 Mining.

BlackRock’s investment in a Bitcoin mining company is a bold and innovative move that, on the one hand, promotes the Bitcoin network and ecosystem The growth and development of the network improves the security, stability and diversity of the network, and supports the innovation and adoption of this technology; on the other hand, it also demonstrates its interest and participation in the cryptocurrency field, as well as its value and contribution to the industry. Recognition and appreciation of potential.

4) Work closely with crypto industry organizations

The issuer The Bitcoin ETF application has been battling with the SEC for a long time, and while BlackRock is actively promoting the matter, it iscollaborating and consulting with other stakeholders and experts in the crypto industry, such as Coinbase, Fidelity, and VanEck, to resolve the matter. SEC Concerns and Requests.

In 2022, BlackRock reached a cooperation agreement with Coinbase to operate its Aladdin The platform integrates with Coinbase, the leading cryptocurrency CEX, to create a robust solution for the IBIT ETF.

In addition to the Bitcoin ETF, BlackRock has also formed partnerships with some of the largest cryptocurrency players. It holds a minority stake in stablecoin company Circle Internet Financial and manages more than $25 billion in reserves in government money market funds, backing Circle’s USDC and more.

BlackRock also manages private Bitcoin trusts for professional clients. The trust has more than $250 million in assets, and most clients have since moved money into new ETFs, according to people familiar with the matter.

03. BlackRock CEO: Bitcoin is really good

BlackRock vs. Bitcoin The acceptance was gradual. During the epidemic, Rick Rieder, the company’s chief investment officer for global fixed income, began to allocate Bitcoin futures in his funds. Robbie Mitchnick, BlackRock’s head of digital assets, also helped convert Fink into a Bitcoin believer, according to people familiar with the matter.

Mentioning Fink, he was listed on the "Forbes Global Billionaires List" as early as 2022, whether it is investment talent, leadership skills or social skills, The 72-year-old Larry Fink is known as the "Godfather of Wall Street" and the founder of the "Financial Empire" and has contributed a lot to the development of BlackRock.

But Fink was not a believer in Bitcoin from the beginning. In 2017, Fink called Bitcoin a "money laundering index." He has also repeatedly criticized cryptocurrencies, calling them “something that customers simply don’t want to invest in.”

It was not until 2022 that Fink’s stance on digital assets began to change significantly. Bitcoin's rebound after the 2022 cryptocurrency crash was a big factor in BlackRock's shift in perspective, according to people familiar with the matter.

In a conference call in April of that year, Fink said the company was studying the cryptocurrency space extensively and had observed continued customer interest. Increase. That same month, BlackRock participated in Circle’s $400 million funding round. Then in the summer, BlackRock quietly launched a spot Bitcoin product for U.S. institutional clients as their first private trust product. BlackRock seeded the fund with its own money and scaled it with outside investors.

Also that same year, BlackRock formed a partnership with Coinbase, allowing institutional clients to own Bitcoin on cryptocurrency exchanges Use their suite of software tools, Aladdin, to manage portfolios and perform risk analysis. So, Coinbase is currently the custodian of their spot Bitcoin ETF.

Now, it’s fair to say that Fink is one of Bitcoin’s biggest believers, and his company, BlackRock, lends legitimacy to Bitcoin and Manages the fastest-growing Bitcoin fund, forges partnerships with top players in the digital asset industry, and opens the door for mainstream investors to buy and sell Bitcoin as easily as investing in stocks.

Now, BlackRock’s cryptocurrency ambitions are no longer limited to Bitcoin,The asset manager is filing a pending application with the SEC to launch a holding company There are ETFs for EthereumEthereum is the second largest cryptocurrency by market capitalization and the native token on the Ethereum blockchain. The regulatory deadline is in May, which is worth looking forward to.

04. Summary

As BlackRock’s slogan says, “Invest in New World", BlackRock believes that cryptocurrency and blockchain technology can transform the financial industry and create new opportunities for growth, efficiency and inclusion.

Perhaps in recognition of the growing demand and adoption of cryptocurrencies among institutional investors, retail investors, governments and businesses,Bele Germany’s interest in cryptocurrency is no longer limited to jumping on the bandwagon or making a speculative gamble, but rather as a strategic long-term vision.

It is foreseeable that BlackRock will be indispensable in the future encryption field.

　　Disclaimer: Includes third-party opinions. No financial advice. See Risk Warning.