As Bitcoin, the primary digital currency soars, more institutional investors are entering the crypto asset class.
BlackRock, the world’s largest asset manager, is deepening its crypto footprint.
“Prospectus documents filed with the U.S. Securities and Exchange Commission Wednesday indicate that BlackRock Global Allocation Fund Inc. and BlackRock Funds V are at least eyeing bitcoin. They both include “bitcoin” on their list of derivative products cleared for use,” reports Danny Nelson for CoinDesk.
Bitcoin futures debuted in the U.S. in late 2017.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, even allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Will Bitcoin Futures Jumpstart a Bitcoin ETF?
Some market observers believe the launch of Bitcoin futures will speed the introduction of exchange traded funds based on the digital currency. In recent weeks, several ETF issuers have also filed plans for blockchain ETFs, which would hold stocks with exposure to the digital currency trade.
“BlackRock did not state which commodity exchange it will choose to execute bitcoin futures buys. However, the funds may only invest in cash-settled bitcoin futures. CME is the only exchange registered with the Commodity Futures Trading Commission (CFTC) that offers cash-settled bitcoin futures at this time,” according to CoinDesk.
Among the long list of issues facing Bitcoin and other cryptocurrencies is adoption. When will crypto become more widely accepted for mainstream activities?
The good news is the adoption trajectory for Bitcoin looks compelling. Looking at the S-curve, which measures adoption of new technologies, Bitcoin is right where it should be according to many market observers.
“The filings appear to mark BlackRock’s entrance into the bitcoin market,” adds CoinDesk. “Before Wednesday, the investments giant has never so much as mentioned “bitcoin” in any of its regulatory filings. But that appears to be changing: “Certain Funds may engage in futures contracts based on bitcoin,” the prospectus documents state.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.