BlackRock CEO Larry Fink has not been a fan of bitcoin for years. Neither have many of his peers in the legacy financial system. Warren Buffett and Charlie Munger have constantly attacked the digital currency in public appearances, while Jamie Dimon and Ken Griffin have both suggested it would be un-American for an alternative financial system to prevail.
The pendulum seems to be swinging in the opposite direction though.
BlackRock’s Fink was on Fox Business yesterday and expressed complete support for bitcoin. He said:
“Instead of investing in gold as a hedge against inflation, a hedge against the onerous problems of any one country, or the devaluation of your currency whatever country you’re in – let’s be clear, bitcoin is an international asset, it’s not based on any one currency and so it can represent an asset that people can play as an alternative.”
In some ways, BlackRock’s CEO is becoming Bitcoin’s Chief Marketing Officer. When Larry Fink speaks, Wall Street listens. And if Larry Fink is going to evangelize bitcoin to his peers then we are in for a demand shock like we have never seen before.
His comments yesterday come on the heels of BlackRock filing for a bitcoin spot ETF, which would bring billions of dollars in institutional capital to the ecosystem. Just how much capital are we talking about? BlackRock has just under $9 trillion in total assets under management. Of course, they won’t move all of their assets into bitcoin, nor will they suggest their clients do that either.
A simple 1% allocation of BlackRock’s assets would be $90 billion. This would be 15% of bitcoin’s total market cap as of this morning. Given how illiquid bitcoin is at the moment, with approximately 70% of all bitcoin in circulation not having moved in the last 12 months, any double-digit percentage increase in capital in-flows would have a material impact on price.
More interestingly, it will likely take a few months for the ETF to get approved. There will be a few months delay for clients to warm up to the idea and start pouring material capital amounts into the product. This is worth paying attention to because we are less than 10 months out from the next bitcoin halving.
Demand shock from BlackRock. Supply shock from the halving. Run it back.
Add in the fact that the Fed will be forced to cut interest rates and start printing money again at some point in the next 18 months.
I can’t believe I am writing this, but there is an increasing chance that QE returns as we hit the next halving, which drives the rocket fuel thesis that I had in 2020. Bitcoin went up more than 700% in the next 12 months. Who knows what will happen this time, but the market structure is too obvious to ignore.
Large Wall Street institutions just got the air cover they needed to jump head first back into bitcoin. It won’t happen overnight, but they are coming. And they are going to come heavy.
I wish there was more complexity to how the next two years will play out. I am not convinced there is much more to it than a simple equation:
BlackRock-led demand shock. Halving-led supply shock. Fed-led easy money regime.
Bitcoin loves that scenario. You can’t stop an idea whose time has come. We will see what happens, but I am having deja-vu. The last time we saw this scenario, most people ignored it. I don’t think people will be so confident this time.
-Admin
Bitcoin Black Cash Corporate
61 Bridge Street, Kington, England, UK, HR5 3DJ
