What to know:
- BlackRock, the asset management giant founded and run by Larry Fink, helped validate crypto for many on Wall Street by jumping into bitcoin ETFs.
- Institutions embraced crypto, thanks to the trend Fink accelerated.
As I delve deeper into the world of cryptocurrency and its pioneers, I find myself continually astounded by the wisdom, foresight, and strategic prowess that these visionaries possess. Among them, Larry Fink, the CEO of BlackRock, stands out as a beacon of insight and pragmatism.
Larry Fink’s company, BlackRock, isn’t an early adopter in the realm of cryptocurrencies. However, it’s still making significant strides and inspiring other Wall Street giants to hop on board this digital trend.
In 2023, the world’s largest asset manager, BlackRock, stunned both the investment and cryptocurrency community by applying to establish a Bitcoin (BTC) exchange-traded fund. The value of BTC surged after this significant player in finance made an unexpected move into the crypto market.
In 2024, BlackRock was granted approval by U.S. authorities, similar to several other entities. Some believe that BlackRock’s significant influence might have influenced the Securities and Exchange Commission in favor of Bitcoin ETFs.
This occasion was a strong contender for Cryptocurrency Story of the Year. Although Donald Trump’s endorsement of cryptocurrencies during his campaign might have taken center stage, the Bitcoin Exchange-Traded Fund (ETF) development continues to rank among the top contenders.
The numbers show this.
As a crypto investor, I’ve noticed since January, institutional investors have injected more than $30 billion into ETFs. This isn’t your typical tech-savvy crowd or risk-taking traders, often referred to as “crypto degen.” Instead, this is what you might call “smart money” – the kind that comes from seasoned professionals like hedge funds, endowments, and other top-tier financial firms. Their extensive experience in the field makes this capital a significant addition to our crypto market.
In another development, the market capitalization of Crypto has expanded significantly since BlackRock submitted its Bitcoin ETF paperwork, growing from approximately $1 trillion to almost $3.6 trillion as per data from Coinmarketcap. We’re now living in a time where Dogecoin (DOGE), initially created as a humorous token with no practical use, holds a market cap larger than Ford (F) and nearly double that of Adidas (ADS) – well-respected brands with long histories dating back over many years.
Fink’s adoption of cryptocurrencies significantly contributed to the revival of the crypto sector following the bear market triggered by the collapse of FTX.
Fink’s philosophy
Waiting for the right moment might just be Larry Fink’s secret sauce.
As per Fink, what truly distinguishes outstanding companies from good ones is not their early adoption of new trends, but rather their capacity and willingness to adapt continuously in a world that’s always evolving. BlackRock didn’t originate ETFs; they were created in 1993 by someone else. However, BlackRock’s significant growth in this area began more than a decade ago when it acquired iShares. This year, iShares, under the BlackRock umbrella, launched a bitcoin ETF and another one tracking Ethereum‘s ether (ETH).
As an analyst, I often come across businesses that rely heavily on a limited number of products without undergoing significant transformation. These companies seem to overlook the broader ecosystem and its dynamic changes.
Fink said in an interview with Harvard Business Review in 2015.
Reflecting on my own research into BlackRock’s advancements in the digital asset realm, it is evident that Larry Fink’s principles are consistently reflected in their actions.
Contrary to the widespread belief that I, as a crypto investor, have been skeptical about cryptocurrencies, particularly Bitcoin, this assumption is actually misplaced. In a 2017 interview, I, as the CEO of BlackRock, expressed myself as a strong proponent of the potential that cryptocurrencies hold. However, during that time, their practical applications largely revolved around speculation, according to my own words.
In the following three years, Fink once more expressed his opinion that the emerging asset class might mature into a significant player on the global financial market.
It wasn’t until the year 2022 that BlackRock started making moves into the crypto sector, allowing select clients to trade digital currencies. Later in 2023, an application for a bitcoin ETF was submitted, and the product was launched this current year. Throughout this journey, BlackRock played a significant role in reshaping the entire cryptocurrency industry.
As a researcher studying cryptocurrency exchange-traded funds (ETFs), I can attest that the endorsement from a prominent figure in finance carries significant weight, undeniably marking a turning point for our field.
BlackRock’s endorsement of cryptocurrency served as a strong validation for professional investors, paving the way for vast amounts of institutional funds, estimated in billions, to enter the crypto industry.
At the start of the year, Bitcoin was holding steady around the $44,000 level. However, it didn’t take long for it to break records and soar past $70,000 shortly after Exchange-Traded Funds (ETFs) began trading in January. By December, its value surpassed $100,000, marking a significant increase as the price more than doubled since the introduction of these ETFs.
Over the course of several weeks following the launch of Bitcoin Spot Exchange-Traded Funds (ETFs) in January, the CoinDesk 20 Index – a collection of the top 20 cryptocurrencies – experienced a significant surge of approximately 53%. This increase has raised optimism among investors that this trend might serve as a driving force for other digital assets, much like how Bitcoin’s ETF launch could potentially impact them.
According to Geraci, the endorsement from BlackRock holds significant influence among investors, financial advisors, and institutional players. Not only did Larry Fink give his approval for spot bitcoin and ether ETFs, but he also publicly advocated for these assets, thereby boosting their credibility.
The institutions surely reacted.
Approximately 2,000 institutions have invested in Bitcoin Exchange Traded Funds (ETFs), with notable hedge funds such as Marc Rowan’s Apollo Global Management and Izzy Englander’s Elliott Management among them.
Notably, even institutions like pension funds, universities, and cities – commonly associated with conservative investment strategies – collectively invested hundreds of millions into these Exchange-Traded Funds (ETFs).
BlackRock’s interest goes far beyond
BlackRock’s involvement in the digital asset sector extends well beyond merely treating it as a means for speculation. Instead, they are deeply interested in the intricacies of transforming traditional financial products into digital form, particularly Real World Asset (RWA) tokenization.
By March 2024, the investment company declared an alliance with digital currency specialist Securitize to debut their initial tokenized investment fund, known as the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). This fund will be distributed on the Ethereum blockchain network.
Unlike BUIDL, the OnChain U.S. Government Money Fund from Franklin Templeton wasn’t a novelty when it debuted on the market in 2021. In fact, this fund had been around for quite some time before BlackRock introduced a similar tokenized Treasury fund.
Initially, Fink didn’t pioneer the field, but that didn’t prevent him from swiftly reaching the summit. Just under six weeks after its launch, BUIDL quickly became the largest tokenized Treasury fund with a market cap of $375 million. Today, it has grown to $530 million and remains at the pinnacle, trailed by Hashnote, Ondo, and Franklin Templeton’s funds.
2021 saw Securitize team up with BlackRock to unveil their inaugural tokenized investment fund, known as the BlackRock USD Institutional Digital Liquidity Fund, or BUIDL. This landmark endeavor emerged as the largest tokenized treasury fund globally in terms of Assets Under Management (AUM), playing a pivotal role in narrowing the divide between traditional finance (TradFi) and the crypto market. According to Carlos Domingo, co-founder and CEO of Securitize, “This collaboration underscores BlackRock’s public endorsement of tokenization as a catalyst for capital markets transformation, bolstering our faith in this technology. We are truly appreciative of their dedication to fostering advancements within the ecosystem.
The significant expansion of BlackRock’s product portfolio has propelled the value of Tokenized Treasury notes beyond the $2 billion mark, creating a popular choice among investors seeking to capitalize on the escalating Treasury yields of recent years in a streamlined market environment.
The bottom line
Essentially, Fink tends to be cautious about embracing new tech. Instead, he prefers to watch and wait until the moment feels right for action.
It’s likely that most people in Fink’s traditional finance network are already familiar with this, explaining why his commitment to the cryptocurrency industry has significantly influenced other prominent figures in the conventional financial world.
In simpler terms, it’s tough to accept that a retirement fund would invest hundreds of millions into Bitcoin without the backing of Fink’s endorsement.
Geraci stated that it was similar to the ‘Financial Pope’ endorsing a fresh investment sector, and he emphasized that this approval will carry significant weight.
This profile belongs to our list of the Most Influential Individuals in 2024, as compiled by CoinDesk. To view this year’s complete list of nominees, please follow this link.
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2024-12-10 18:31