BlackRock Launched its First-Ever Investment Product Linked Directly to Bitcoin

BlackRock profoundly announced launching a private trust to give clients exposure to spot Bitcoin (BTCUSD). A new U.S. institutional client-focused private Bitcoin Trust is made on the heels of long-successful Grayscale Bitcoin Trust (GBTC), but given the scale of BlackRock market operations, the move is expected to add a lot of fuel to the impending Bitcoin rally and, possibly, push towards more global central banks’ acceptance of cryptocurrencies.

The trust aims to track the price of Bitcoin and is “…responding to growing demand from major players looking to gain direct access to the asset” (even after the price has fallen since the beginning of this year), the company said in a statement quoted on Bloomberg. "Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities," the company said in the post.

The post said BlackRock has been researching areas with "potential to benefit our clients and capital markets more broadly," including permissioned blockchains, stablecoins, cryptoassets and tokenization. In addition to BlackRock, the Aladdin and Charles Schwab funds launched several digital asset products this month.

BlackRock recently announced a partnership with Coinbase (COIN) that will provide common clients of Aladdin and Coinbase access to the digital assets trading lifecycle through connectivity between Coinbase and the Aladdin platforms, starting with Bitcoin. Leveraging Coinbase’s comprehensive trading, custody, prime brokerage and reporting capabilities, the clients will be able to manage their Bitcoin exposures alongside their public and private investments.

Bitcoin is still more than 60% below its all-time high of almost $69,000. However, many investors believe it has found a bottom with stocks, with the two asset classes being more correlated to each other this year than ever before, amid 2022's risk-off posture in the wake of Fed monetary tightening. On Thursday, August 11, Bitcoin rose above $24,700 to its highest level since its June low.

BlackRock on Thursday also highlighted the work of energy nonprofits RMI and EnergyWeb for their work "to bring greater transparency to sustainable energy usage in bitcoin mining," adding the firm "will follow progress around those initiatives."

Thursday's news is the latest in BlackRock's foray into crypto. The company, which has about $8.5 trillion in assets under management, announced recently a partnership with Coinbase that allows its institutional clients to buy crypto, beginning with bitcoin.

This also comes amid frustration by new institutional investors in the market keen to see the Securities and Exchange Commission approve a spot Bitcoin exchange-traded fund. So far, only Bitcoin futures ETFs have been approved.