BlackRock Launches Private Bitcoin Trust For Institutional Clients

By Kevin • August 14, 2022 6:38 pm • Comments

It was revealed that BlackRock has now launched a private trust for its institutional clients that want direct exposure to Bitcoin.

As part of the announcement, it stated that the reasons include the fact that there was sustained institutional demand despite the recent downturn in the crypto markets.

Right now, the price of Bitcoin is far from its all time high and data is showing that the asset class is very correlated with the equities market this year.

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With the launch of this new private trust, it is expected that even more capital will flow into BTC due to its ability to be a storage of wealth.

CNBC reports:

Bitcoin is still more than 60% below its all-time high of almost $69,000. However, many investors believe it has found a bottom with stocks, with the two asset classes being more correlated to each other this year than ever before, amid 2022′s slide in risk assets.

On Thursday, the digital currency rose above $24,700 to its highest level since just before it fell to its June low.

“Bitcoin is the oldest, largest, and most liquid crypto asset, and is currently the primary subject of interest from our clients within the crypto asset space,” the post continued.

The announcement follows CEO Larry Fink saying earlier this year that BlackRock clients had been showing “increasing interest” in digital currencies, including stable coins and “the underlying technologies” — also known as blockchain.

This is not the first time that BlackRock has gotten involved in the crypto space, but the launch of this new trust has confirmed the fact that crypto is now becoming mainstream.

BlackRock has also recently partnered with CoinBase in order to allow its institutional partners to acquire Bitcoin directly and will likely include other digital assets in the future.

The fact that BlackRock is getting fully involved in significant news as the firm currently manages around $8.5 trillion in assets which is greater than the total market cap of crypto right now.

What moves the firm makes in the future is still unknown, but it is expected that there will be more progress made as many institutional investors have now changed their tune towards digital assets in the recent years.

Yahoo concludes:

Noting four key areas, BlackRock added, “​​we see potential to benefit our clients and capital markets more broadly, including: permissioned blockchains, stablecoins, cryptoassets, and tokenization.”

The offering is a BlackRock client exclusive version of publicly available bitcoin trusts such as the Grayscale Bitcoin Trust (GBTC) and Osprey Bitcoin Trust (OBTC), which trade on over-the-counter markets.

Unlike exchange traded funds, these trust’s cannot continuously create and redeem shares, resulting in trust shares often trading at a discount or premium to bitcoin’s open market price.

As of Thursday afternoon, bitcoin was trading near $24,300 per coin, up 7% in the last week but 49% below where it stood at the beginning of January.

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