Investment giant BlackRock filed documents with the Securities and Exchange Commission showing that it wants to include cash-settled Bitcoin futures as eligible investments for two of its funds—the latest instance of a major financial institution dipping a toe into cryptocurrencies.
- Two new filings, for the BlackRock Global Allocation Fund and the BlackRock Strategic Income Opportunities Portfolio, state that “certain funds may engage in futures contracts based on bitcoin.”
- The filings add that the only bitcoin investments the funds will be allowed to buy are “cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC.”
- The regulatory filings are not a guarantee that BlackRock will add bitcoin futures to the new funds, but they are a sign that the investment giant is considering them.
- BlackRock also acknowledged the liquidity risks that accompany investments in bitcoin futures, which stem from the fact that the market is new and the futures are not as heavily traded as other futures products.
Three years ago, BlackRock CEO Larry Fink called bitcoin an “index of money laundering.” He’s since changed his tune, suggesting in December that the cryptocurrency could “possibly” evolve into a global market one day.
Bitcoin started the year with a massive rally, reaching all time highs of more than $40,000, before plunging back down on reports of heightened regulatory scrutiny. Some attributed the rally to heightened interest from institutional investors including Massachusetts Mutual Life Insurance.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors,” strategists from JPMorgan said this month in a note reported by Bloomberg. “One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
WHAT TO WATCH FOR
OANDA Senior Market Analyst Edward Moya noted that bitcoin’s 5% losses on Wednesday might actually spur more institutional investors to buy in. “This doesn’t seem like the end for the crypto bubble,” he wrote, “you just might need to see Bitcoin drop to $30,000 level before that institutional money sees value in it.”