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09/22 update below. This post was originally published on September 19
Bitcoin
Bitcoin
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The bitcoin price has climbed to over $62,000 per bitcoin, with traders now turning to a China “shock and awe” earthquake, after the Fed surprised traders with a 50 basis point cut, kicking off what’s expected to be a fresh liquidity cycle that could put the bitcoin and crypto market on the “cusp” of a major move.
Now, as fears swirl the U.S. dollar is on “the verge of a total collapse,” the world’s largest asset manager BlackRock has warned of “growing concerns” around the spiraling $35 trillion U.S. debt pile that’s predicted to drive “institutional interest in bitcoin.”
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Federal Reserve chair Jerome Powell has this week announced the first post-pandemic interest rate … [+]
“The growing concerns in the U.S. and abroad over the state of U.S. federal deficits and debt has increased the appeal of potential alternative reserve assets as a potential hedge against possible future events affecting the U.S. dollar,” BlackRock’s exchange-traded fund (ETF) chief investment officer, its head of crypto and its head of fixed income global macro wrote in a paper outlining the investment case for bitcoin.
“This is why some have called bitcoin the 2nd amendment of money,” Bloomberg Intelligence ETF analyst Eric Balchunas posted to X, adding the U.S. debt pile of $35 trillion that’s growing at a clip of $1 trillion every 100 days has “no end in sight.”
“This dynamic appears to be also taking hold in other countries where debt accumulation has been significant,” the authors of the BlackRock paper added. “In our experience with clients to date, this explains a substantial portion of the recent broadening institutional interest in bitcoin.”
09/22 update: The Nasdaq exchange has been given the green light by the U.S. Securities and Exchange Commission (SEC) to list and trade shares of options for BlackRock’s IBIT spot bitcoin exchange-traded fund (ETF). “Options on IBIT will be physically settled with American-style exercise,” SEC officials wrote in a notice.
BlackRock’s spot bitcoin ETF has become one of the fastest-growing ETFs of all time since its January debut, ending a decade-long campaign to bring a fully-fledged bitcoin spot ETF to market.
“[The] SEC has just granted accelerated approval for the listing and trading of options on IBIT,” Bloomberg Intelligence ETF analyst Eric Balchunas posted to X, calling the update a “nice surprise” and “huge win for the the bitcoin ETFs as it will attract more liquidity which will in turn attract more big fish.”
However, Balchunas said that the OCC [Office of the Comptroller of the Currency] and CFTC [Commodity Futures Trading Commission] have to give their approval before the options can begin trading. “A big step though, nonetheless, that the SEC came around,” he added.
BlackRock, which has around $10 trillion in assets under management, described bitcoin as a “unique diversifier” to hedge against economic and political risk.
“While bitcoin has shown instances of short-term co-movements with equities and other ‘risk assets,’ over the longer term its fundamental drivers are starkly different, and in many cases inverted, versus most traditional investment assets,” the paper concluded.
In July, BlackRock’s chief executive Larry Fink said he had been “wrong” about bitcoin when he’d previously dismissed it as “an index of money laundering,” admitting bitcoin is “digital gold” and a “legitimate” financial instrument.
BlackRock’s successful campaign to bring a fully-fledged U.S. spot bitcoin exchange-traded fund (ETF) to market last year has been one of the major driving forces of the bitcoin price in 2024 as Wall Street has piled into the bitcoin market.
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The bitcoin price has surged this year, helped by the Federal Reserve’s dovish shift and BlackRock’s … [+]
In May, BlackRock’s iShares Bitcoin Trust (IBIT) overtook the Grayscale Bitcoin Trust (GBTC) as the world’s largest bitcoin exchange-traded investment fund, with the IBIT’s inflows recently topping $21 billion.
The bitcoin price rally following the Fed’s historical 0.5% interest rate cut is expected by many bitcoin and crypto watchers to signal the beginning of a new bitcoin bull run.
“While there are other macro factors currently impacting the outlook for bitcoin and other risk assets, including geopolitical tensions and election uncertainty, these markets should benefit from the formalization of the Fed’s dovish shift,” Samir Kerbage, chief investment officer at bitcoin and crypto investment company Hashdex, said in emailed comments.
“Our long-term investment thesis for bitcoin remains in tact and regardless of the near-term direction of monetary policy, bitcoin remains well positioned for growth as institutional adoption continues to gain momentum.”