6.2 trillion vs 281 billion dollars

Bitcoin is up 17% this week.

Some of us are trying to figure out what is going on, what is behind this positive mood in the market, some of us are just simply glad and relieved to see some change in the “green” direction. As we reported on Tuesday, the world's first ever bank-backed crypto-currency exchange, Japan’s VCTRADE opened its gates to the public on Monday and that can be one of the answers to questions regarding Bitcoin’s promising rally.

The other answer can be one word: BlackRock. It’s the world’s largest exchange-traded fund (ETF) provider. This Monday, BlackRock made an announcement about forming a crypto working group in order to assess potential involvement in Bitcoin (BTC).

The Blackrock crypto working group will look into whether the company should invest in Bitcoin futures. BlackRock’s spokeswoman, commenting on the announcement, told Financial News (FN) that the company had been “looking at blockchain for several years”.

The world’s largest exchange-traded fund provider has not always been positive about crypto-currencies. Just before last year’s all-time BTC high, BlackRock CEO Larry Fink called Bitcoin “an instrument people use for money laundering.”

BlackRock’s U-turn did not come out of the blue. Five months ago, BlackRock had already signaled that the potential in crypto-currencies was “under close review.”

All that happened so far is that BlackRock made its announcement. And Bitcoin is up by almost 20% compared to its value a week ago. And BlackRock is just one ETF provider. So, you may be asking this question:

Why can one of the world’s most respected exchange-traded fund providers be the key to a major positive change in the crypto space? It’s simple maths. Actually it’s shockingly simple. The total value of clients’ assets that BlackRock manages is a staggering $6.2 trillion. That’s 6.2 billion dollars times 1,000. The crypto market’s total capitalization is $281 billion at the time of writing this article. Comparing the two figures: the total asset value that BlackRock manages is 22 times the current total crypto market cap. It means that when BlackRock decides to invest in Bitcoin only 4.54% of the assets that it manages that will easily double the total crypto market capitalization.

What if BlackRock finds real potential in Bitcoin, and they invest not 4.5% but twice as much (which is still less than 10% of their assets) in the crypto space? And BlackRock is just one of many ETF providers…




Zsolt Balló