By Scott Melker
BlackRock plans for a pair of multi-billion-dollar funds to add bitcoin exposure through its spot bitcoin ETF and other products.
BlackRock, the largest asset manager in the world, now plans to purchase spot bitcoin exchange-traded products (ETPs) for its $18 billion Global Allocation Fund and $36.7 billion Strategic Income Opportunities Fund.
Perspective: Reflecting on this news and the larger adoption of bitcoin products into the world’s largest financial funds, crypto analyst Scott Melker projected that the bitcoin price will soon reach more than double its all-time high mark.
“But imagine when it’s not active investing, but it’s completely passive,” Melker said in the video above. “Imagine when the Fidelities and BlackRocks and Merrills and anybody else who’s indexing adds these products and has to continue to add them to keep up with the percentage of the AUM of that fund. This could send bitcoin far higher than $138,000 or $150,000.”
More details: A recent BlackRock filing with the U.S. Securities and Exchange Commission (SEC) indicated that the firm plans to purchase shares of bitcoin-focused products, including its own IBIT spot bitcoin exchange-traded fund (ETF) for its Global Allocation Fund. This came shortly after a filing indicated it would be doing so for its Strategic Income Opportunities Fund.
“This means they would be passively investing in their bitcoin spot ETF and adding it to funds as a small allocation,” Melker explained. “Let’s say it’s 1%, 2%, 3%, even 5% of those funds… As we see more retail get access to the spot ETFs, because they are finally approved to trade them, as we see more RIA platforms come online, we know that that’s going to continue to add demand and buying pressure.”
Key takeaways: This morning, the bitcoin price set a new historic high above $72,000, breaking the new record it set above $69,000 earlier this week. Analysts have noted that the asset has typically gone on to double its previous records quickly after breaking them.
Reflecting on those price projections, Melker noted that BlackRock’s recent filings could drive the kind of momentum that pushes the bitcoin price beyond $138,000.
“If the past is correct (a bitcoin price doubling) could happen as soon as in 18 days,” Melker said. “It usually happens within a couple months at the very least. Will it happen this time? I have no idea but there are fundamental reasons that we should see those higher prices.”
The context: As of this writing, the bitcoin price is roughly $71,700, up about 2.5% on the day and more than 10% in the last week.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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