BlackRocks’ bitcoin ambitions drive prices up

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Mr Bishop, who worked as managing director at Gresham Partners and head of fixed income at Aberdeen Standard Investments before founding crypto advisory group NotCentralized, said BlackRocks bitcoin gambit shows he was not concerned by the SEC’s track record of rejecting applications to offer the digital assets to retail investors.

He added that the US$10 trillion asset managers’ application could trigger a land grab between banks and competing asset managers to market and sell bitcoin to retail and institutional clients.

BlackRocks’ regulatory filing shows it wants to offer its bitcoin fund on the Nasdaq exchange, with custody by SEC lawsuit target Coinbase and Bank of New York Mellon.

All cryptocurrencies have become progressively more correlated with broader risk assets. It’s a downside I see institutional involvement if a manager of BlackRocks’ scale, balance sheet or funds under management treats this as just another asset class to invest in, Bishop said.

We think of bitcoin as digital gold and ethereum as digital oil. Bitcoin is not programmable like ethereum, but it is exceptionally good at doing its job, which is transferring value in a hyper, hyper-secure way. But that’s all.

The institutional adoption of bitcoin widens its divergence from its original conception as a decentralized, apolitical cryptocurrency first adopted in a counterculture world, where value could be transferred without political or commercial control, a added Mr. Bishop.

Many decentralized maxis will be appalled by this [BlackRocks] involvement, and we often have conversations with some early adopters, but it’s hypocritical to say that this technology is the best in the world and then to denounce the involvement of these institutions. You can’t have it both ways, he said.

Professional investors, asset managers, and traders are still unsure how to value bitcoin or predict its future direction. Some claim it is a Ponzi scheme as it has no intrinsic value, while others like Ms Wood boast that their analysis shows it could hit $1m by 2030 .

Bishop said the correlation between bitcoin and other risky assets would be strengthened if BlackRock and other traditional financial powerhouses launched ETFs.

Bitcoin does not offer equity participation and when you buy bitcoin you are not exposed to any operating or trading model or margin flow, he said. So it’s a potential downside [from institutional promotion] let it be cemented in a bucket of other digital risk assets.

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