BlackRock Confirms Investment in Bitcoin Futures, What It Means for BTC price?

By Casper Brown
February 9, 2021 Updated February 9, 2021
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Over the past week, the crypto community has been in a frenzy over Blackrock, a $7 trillion fund, outlining its potential move into Bitcoin futures trading. Signaled as a tipping point for institutional investors joining the bandwagon, Blackrock’s latest decision may well push Bitcoin past its $42,000 highs set in early Feb. 2020.

In its filing to the SEC, Blackrock, the world’s largest investment corporation, stated it may invest in Bitcoin futures in some of its funds. The filing states the company will be investing in cash-settled futures on CTFC regulated exchanges only, rather than make direct purchases on Bitcoin. Blackrock is a pacesetter in the financial world, and the crypto community has been eagerly waiting for them to start investing in Bitcoin. 

“The only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC,” the filing sent to the SEC confirms.

The filing further mentioned two possible funds that may take up Bitcoin investments – BlackRock Global Allocation Fund and BlackRock Funds V.

So what exactly does Blackrock’s entry into crypto mean for Bitcoin’s price and the overall crypto market? 

Why Blackrock’s futures could spike BTC price

If successful, Blackrock’s latest filing represents a switch in the company’s investment stance on Bitcoin. The company has previously dismissed Bitcoin given the high volatility and regulation challenges, but it seems the company is turning over a new leaf. Blackrock is currently building legal and operational foundations to trade Bitcoin.

Bitcoin futures demand increase

The filing signals a new dawn for the Bitcoin community, as new institutional and retail investors join the community through Blackrock. Could an increase in demand for Bitcoin products from Blackrock’s clients be the reason the largest investment fund switched its dissenting comments on Bitcoin?

The launch of Bitcoin futures on Blackrock’s funds shows that customers are more receptive to Bitcoin despite the volatility as the world embraces BTC as a globally investable asset class. This could boost the customer adoption rates on Bitcoin – especially institutional and accredited investors. 

“As the industry matures, traditional institutions are beginning to notice the potential of Bitcoin and crypto as a whole. We welcome the entry of all new participants as we pave a road towards mainstream adoption. Blackrock’s initiative is only one of many more to come,” Jack Tao, Phemex CEO said.

Replacing gold?

Blackrock’s entry to Bitcoin paves the way for the asset to finally replace gold as the leading store of value across the globe. Having competed ferociously over the past few years for the title of “safe haven king”, Bitcoin’s addition to Blackrock’s assets may see investors prefer the digital asset to the shiny rock. 

In November, a month before the SEC filing, Blackrock’s CIO, Rick Rieder spoke to CNBC claiming the digital asset has the potential to replace gold in the future. He said, 

“Do I think it’s a durable mechanism, do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.”

With demand for Bitcoin futures products increasing and the proposition of Bitcoin as a replacement for gold also rising, volumes across crypto exchanges are expected to spike as retail investment money follows institutional investment. 

Bitcoin Bull Market Giving Rise to New Market leaders

Crypto exchanges will, without doubt, be the biggest beneficiaries of Blackrock’s decision to purchase BTC futures. As retail customers flock in and FOMO into Bitcoin futures, it is crucial to select the best exchange to carry out your trades. 

Blackrock, however, is the latest but not the only company getting in on crypto. Microstrategy has been accumulating Bitcoin worth over $1.5 billion since October and multiple companies increasing their exposure to Bitcoin through Grayscale has caused an overall upheaval in the crypto market – moreover, the crypto derivatives market. 

Phemex, one of the fastest crypto exchange and futures platforms, has emerged as one among the top rising crypto futures trading exchanges by offering the fastest and cheapest ways for retail to trade futures and spot Bitcoin prices. With an offer of up to 100X leverage on its futures, clients on the exchange can amplify their potential profits through its margined products. The exchange also offers a user-friendly platform to trade spot contracts. 

Additionally, the DeFi space is massively growing as new blockchain-based products aim at minimizing the ineffective processes in the traditional financial world. Phemex offers its ‘Earn Crypto’ asset management allowing users up to 10% APY through ‘Fixed and Flexible Saving’ options. Flexible accounts allow for instant withdrawals and deposits at any time.

The Singapore-headquartered exchange offers coin-settled and cash-settled futures, similar to Blackrock’s filing, on a high-performance platform with over 300,000 transactions completed every second and a 1-millisecond trade execution. 

Parting shot

Blackrock’s entry into the crypto arena breathes a new wave of fresh air into the market, maybe starting off the biggest institutional investment run into crypto. As new users enter the field, finding efficient crypto exchanges such as Phemex will be crucial to making their journey in trading crypto futures seamless and enjoyable. 

I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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