Bitcoin, BlackRock, and the Road Ahead: A Confluence of Factors
Sep 19, 2023
Disclaimer: This article represents an opinion and is not intended as financial advice.
Is the crypto market on the cusp of another bull run? To answer this question, we turn to a combination of historical trends and recent developments surrounding Bitcoin. One of the pivotal events on the horizon is the anticipated Bitcoin Halving on track to happen around May 2024. This event, which will cut block rewards from 6.25 BTC to 3.125 BTC per block and has historically triggered exponential price surges.
Given this historical data, it's reasonable to expect a repeat of this cycle. Notably, Plan B's price projections on Twitter have proven fairly accurate in the past. According to this model, the green-marked area after a halving event historically signifies an opportune time to invest in BTC.
If we apply Technical Analysis to Bitcoin, using FIB Extension lines to 1.272, Bitcoin would see a price range of $104,755. Most recently, an X user Node Baron posted a formula used for Bitcoin price determination. As you can see each of these models has ranged Bitcoin to near 6 figures in the future.
However, for the crypto market to truly thrive, it requires an injection of new liquidity. Currently, retail investors have largely exited the market due to rising inflation and mounting debt. Here is where the potential approval of Bitcoin ETFs by the SEC becomes a crucial factor. Enter BlackRock, the largest asset manager globally, and the slew of ETF applications filed by major players in the industry.
BlackRock, founded by Larry Fink in 1988, has evolved into the world's largest asset manager, overseeing a staggering $10 trillion. This constitutes a quarter of the global wealth, totaling around $40 trillion. BlackRock, Vanguard, and State Street make up the Big Three in passive fund asset management. Interestingly, State Street is owned by BlackRock, and Vanguard is the largest shareholder of BlackRock. BlackRock being the largest asset manager and a firm who not so quietly is centering themselves to be one of the largest BTC holders by proxy.
In terms of environmental and ethical practices, BlackRock places a strong emphasis on leading in Environmental, Social, and Corporate Governance (ESG). This involves evaluating the ethical and sustainability practices of a company or business. Given this focus, it's pertinent to note the recent data on BTC mining. The Bitcoin Mining Council's Q1 2023 report showcases encouraging statistics, dispelling some concerns about the environmental impact of BTC mining.
According to the report:
- Global BTC Mining consumes 0.21% of the world's global energy production.
- Global BTC Mining contributes 0.135% of the world's Carbon Emissions Production.
- Global BTC Mining consumes less energy than Gold Mining and slightly more than Computer Games and Holiday Lights.
This study has reshaped the narrative around BTC's environmental footprint, aligning with BlackRock's ESG-friendly approach. As BlackRock openly endorses Bitcoin, citing its potential to "revolutionize finance," there's a clear positive trend towards environmentally conscious mining practices.
If Bitcoin is indeed set to "revolutionize finance," it becomes evident that investing in the foundational infrastructure of this asset is crucial. These investments not only grant BlackRock exposure to BTC but also align with its ESG objectives, specifically in reducing emissions. BlackRock has emerged as a significant stakeholder in four of the top five Bitcoin mining companies in the U.S., which include Riot Blockchain, Marathon, Cipher Mining, and TeraWulf. CNN Business has confirmed these holdings. Notably, BlackRock has actively increased its investments in these enterprises, notably elevating its position in Cipher Mining by 18.63%. Although a major shareholder, The Vanguard Group holds the majority of shares in these Bitcoin mining firms. Furthermore, BlackRock has applied for a spot Bitcoin exchange-traded fund (ETF) and possesses a 15.24% stake in MicroStrategy, a company boasting substantial Bitcoin holdings.
Should a Bitcoin ETF gain approval, experts anticipate a surge in BTC price. Fundstrat predicts a potential rally to $168,000, attributing it to increased accessibility via the ETF, which would attract both institutional and retail investors. This projection aligns with historical data centered around halving events.
While BlackRock leads the charge in ETF applications, they are joined by a host of other major players, none of whom have secured approval as of August 2023.
3. Invesco Galaxy
4. Valkyrie Investments
5. Ark Invest
7. Fidelity/Wise Origin
8. Global X
10. First Trust/SkyBridge
11. NYDIG/Stone Ridge
12. One River
13. Galaxy Digital
Considering all these factors and BTC tokenomics, we are poised for a substantial move in the upcoming bull run. The stage is set for a potential influx of institutional capital returning Bitcoin to its highest market capitalization of $1.28 Trillion and beyond.
Writing this article has opened Pandora's Box. Expect a follow up in the weeks to come on the following:
A deeper dive into the top 10 BTC holders, their potential connections to BlackRock, any links between BlackRock and the current US Administration, and the US government's role in BTC's creation are questions that merit further exploration.