BlackRock Now Owns Bitcoin
BlackRock is the world's largest investment firm with $8.67 Trillion in Assets Under Management
Wednesday, February 17, 2021
The Big News
BlackRock now owns Bitcoin - perhaps the biggest news in bitcoin history. (As an aside, Bitcoin reached another All Time High $52.2K.)
BlackRock is the largest investment firm in the world. The firm has $8,670,000,000,000 (or $8.67T) in Assets Under Management (AUM).
Today on CNBC Rick Rieder, CIO of Fixed Income and Global Allocation at BlackRock, said, “I think crypto has generally gotten the imagination a lot of people. Today the volatility is extraordinary. Listen. People are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and [storehouses of value] is their building. So, yeah we’ve started to dabble a bit in it. I wouldn’t put a number on the percentage allocation people should have. My sense is that the technology has evolved and the regulation has evolved to the point where a number of people find it should be a part of their portfolio. So that’s what’s driving the price up…You know we are holding a lot more cash than we’ve held historically because duration doesn’t work, interest rates don’t work as a hedge, and so diversifying into other assets makes some sense. So, holding some portion of what you hold in cash and things like crypto seems to make some sense to me.”
TLDR: We, BlackRock, have more cash than we’ve ever had. That cash is likely getting inflated away as the government prints more money. Bitcoin is a store of value. So we’re going to diversify some of our cash into Bitcoin (and maybe some other “crypto” too).
Let’s do the simple math when BlackRock diversifies into Bitcoin:
Translation of chart: If BlackRock invests 1% of their $8.67T in Bitcoin then that is equivalent to $86B or 9% of Bitcoin’s current market cap. These figures are wild and likely part of why we’ve seen the Bitcoin price move up so rapidly in the last few weeks.
Another noteworthy callout is that Rick Rieder is in Fixed Income at BlackRock. There’s a good chance that BlackRock begins lending Bitcoin so that they can capture the current Bitcoin lending rates at 3-9% APY. They can also get yield by using their bitcoin to sell futures against for a 10%-20% APY. Using bitcoin for lending and derivatives gives BlackRock a much better rate than traditional investments income producing investments like bonds. There’s a reason good ol’ Ricky is smiling in the pic below.
Let’s refill our popcorn. It’s a d*mn good show tonight.
Tweets of the Day
“Just Dabbling” - Rick Rieder, CIO of Fixed Income and Global Allocation at BlackRock, viewed talking on CNBC about “just dabbling” in Bitcoin.
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New ETF for Bitcoin is filed. A few days ago the US government gave the green light for Bitcoin ETFs.
Bitcoin is taking over gold
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A different perspective
Hope y’all have a great evening,
Bitcoin Daily