With their powerful tools, the giants of Wall Street are already making the fight unequal on the Forex and Gold markets. Is it time for Bitcoin? BlackRock, the most powerful fund in the financial world, has just set foot in the crypto market, through a partnership easily announced by Coinbase.
Coinbase Prime will be integrated with AI Aladdin
If you follow the traditional markets, you may have already heard of Aladdin ( Asset, Liability, Debt and Derivative Investment Network ), the AI developed by the American giant BlackRock, and thanks to which the fund manages the majority of its assets under management – which passed the $10 trillion mark this year.
BNP Paribas, Fannie Mae, Bank of America, Genworth… more than 250 financial institutions are clients of BlackRock's management system, and more than 50,000 managers and major investors use its reputedly formidable forecasts.
With its 25 million lines of code and its 1600 full-time developers, Aladdin was at work in the stock, bond, and derivatives markets. By integrating Coinbase Prime (Coinbase's platform for its institutional clients), it is now done for cryptos.
Or rather only for Bitcoin (BTC) at first, if we are to believe the Coinbase press release.
What will BlackRock's role be?
First of all, it is BlackRock's customers who will be led to invest through Coinbase Prime. Their investments in BTC will thus be managed through the Aladdin Wealth software, one of the commercial versions of the system: BTC futures, BTC in staking, and ETF Bitcoin.
Purchase and sale transactions via the software will therefore be possible. Several analysts also mention the possibility for customers to pledge their cryptocurrencies and borrow funds on the basis of this collateral.
Then, it is Coinbase's customers who will also be able to benefit from this formidable tool. It is known that more than 13,000 entities are Coinbase Prime customers, mainly hedge funds, family offices, and private investors.
“Our institutional clients increasingly want exposure to digital asset markets and are focused on how to effectively manage the lifecycle of investments in these assets.
This integration [of Coinbase Prime, editor's note] with Aladdin will allow our clients to manage their bitcoin positions directly in their current portfolio management and trading operations, with global visibility into the risk of all of their active investments." Joseph Chalom (BlackRock)
BlackRock's first BTC investments date back to March 2021
185 BTC: this is the volume of bitcoins bought by BlackRock in March 2021, through a futures contract on the Chicago Mercantile Exchange (CME). Very discreet, it was only thanks to the publication of a report on the site of the SEC, the American stock market policeman, that we had heard of this investment.
In detail, these were 37 standard futures contracts with 1-month maturity, for 5 BTC each, expiring on March 25, 2021.
An anecdotal investment for a fund the size of BlackRock, but which nevertheless allowed it to pocket just over $360,000 in the process.
At the same time, a job offer posted on the giant's web portal had attracted the attention of the financial media, which received only terse statements. The position to be filled was that of an “Engineering Director, a specialist in Digital Assets and Distributed Ledgers” to increase the “human capacities” already in place.
Even though CEO Larry Fink was just kicking the sidelines, BlackRock's plans were becoming increasingly clear, between changing the tone on Bitcoin and launching its in-house crypto ETF, the iShares Blockchain and Tech ETF.
A “BlackRock” effect on Coinbase?
The markets have understood that such a sprawling player does not position itself without an idea of the potential profits at stake, for him and his partner in the operation.
Following the release, Coinbase (NASDAQ: COIN) stock gained 10% and closed the session at $88.90, after peaking at $92.666 in early US trading. Over the last five days, rumors of the partnership had already won 48% in the title.
Beyond its stock market price, this partnership is a breath of fresh air for Coinbase, which has suffered greatly from the persistent bear market. We reported to you in June that the platform separated from 1,000 employees (18% of its workforce), and was trying to find growth drivers in Europe.
It is known that 75% of the daily trading volume on Coinbase comes from its institutional customers. A partnership of BlackRock with Coinbase, rather than with FTX which has an excellent relationship with the SEC, therefore makes perfect sense.
Faced with the specter of hyperinflation, many investors see Bitcoin's current price as an ideal entry point before a potential bull run. If its potential as an alternative currency is not yet evident, the bullish potential of Bitcoin (correlated to technology stocks) is increasingly whetting the appetite of institutional investors.
Rather than launching on its own account, BlackRock, therefore, chooses to position itself as an intermediary … for the moment. If we cannot count on a “BlackRock effect” to pull Bitcoin out of its bearish context, we can at least count on the influx of new institutions, clients of the American mega-fund, into the crypto market. Enough to relaunch a new bullish cycle?
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