BlackRock, the world’s largest asset manager, has revealed that it owns 12,224 Bitcoin, worth about $570 million at current prices. This represents 8.1% of the total Bitcoin holdings of MicroStrategy, the business intelligence firm that has become one of the biggest corporate investors in the cryptocurrency.
The disclosure came in a filing with the US Securities and Exchange Commission (SEC) on August 25, 2023. BlackRock reported that it held 6.71 million shares of MicroStrategy as of June 30, 2023, which gives it a 15.2% stake in the company. According to MicroStrategy’s latest quarterly report, the firm had 151,079 Bitcoin as of June 30, 2023, valued at $7.1 billion.
BlackRock is not the only institutional investor that has exposure to Bitcoin through MicroStrategy. Other major shareholders include Vanguard, Morgan Stanley, and ARK Invest. These firms have indirectly benefited from MicroStrategy’s aggressive Bitcoin accumulation strategy, which has seen the company buy more than 100,000 Bitcoin since August 2020.
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BlackRock’s Bitcoin holdings are significant for several reasons. First, they show that the asset manager is bullish on both MicroStrategy and Bitcoin, despite the volatility and regulatory uncertainty surrounding the crypto market. Second, they indicate that BlackRock is diversifying its portfolio with alternative assets that have high growth potential and low correlation with traditional markets. Third, they signal that BlackRock is positioning itself as a leader in the digital asset space, as it has also launched several exchange-traded funds (ETFs) that track companies involved in blockchain and cryptocurrency.
BlackRock’s CEO Larry Fink has expressed his optimism about the future of digital assets on several occasions. In July 2023, he said that he was “fascinated” by Bitcoin and that he believed it could become a “great asset class”. He also said that BlackRock was studying how it could offer crypto-related products to its clients, as he saw a growing demand for them.
BlackRock’s involvement in Bitcoin could have a positive impact on the adoption and acceptance of the cryptocurrency by other institutional investors and regulators. As the largest asset manager in the world, with more than $9 trillion under management, BlackRock has a lot of influence and credibility in the financial industry. Its endorsement of Bitcoin could encourage more investors to allocate a portion of their portfolios to the digital asset, as well as pave the way for more regulatory clarity and innovation in the crypto space.
One of the main reasons why BlackRock is bullish on bitcoin is its potential to serve as a store of value and a hedge against inflation. As the global economy recovers from the pandemic, many central banks have adopted expansionary monetary policies to stimulate growth and support recovery. However, this also increases the risk of inflation and currency devaluation, which erodes the purchasing power of fiat money.
Bitcoin, on the other hand, has a limited supply of 21 million coins and a predictable issuance schedule that is governed by a decentralized network of nodes. This makes it immune to inflation and manipulation by central authorities. Bitcoin also has a high degree of scarcity and durability, which are essential attributes of a store of value.
Another reason why BlackRock is bullish on bitcoin is its growing adoption and acceptance by institutional investors, corporations, and regulators. In the past year, we have witnessed a surge of interest and demand for bitcoin from various entities that seek to diversify their portfolios, enhance their returns, or gain exposure to the emerging digital economy.
For instance, MicroStrategy, Square, Tesla, and PayPal are some of the prominent companies that have invested in or integrated bitcoin into their businesses. Moreover, several regulators around the world have taken steps to provide clarity and guidance on the legal status and treatment of bitcoin and other cryptocurrencies. For example, the Office of the Comptroller of the Currency (OCC) in the US has allowed banks to custody and facilitate payments with crypto assets, while the Securities and Exchange Commission (SEC) has approved several bitcoin exchange-traded funds (ETFs) in Canada and Brazil.
A third reason why BlackRock is bullish on bitcoin is its innovation and resilience as a technology and a network. Bitcoin is not only a digital currency, but also a protocol that enables peer-to-peer transactions without intermediaries or censorship. Bitcoin relies on cryptography, consensus mechanisms, and distributed ledger technology to ensure its security, integrity, and transparency. Bitcoin also has a vibrant and diverse community of developers, users, miners, and enthusiasts who contribute to its improvement and evolution. Despite facing numerous challenges and threats over its 12-year history, such as hacking attacks, regulatory uncertainty, scalability issues, and forks, bitcoin has proven its ability to adapt and overcome them.
BlackRock is bullish on bitcoin because it believes that it has a unique value proposition as a store of value, a hedge against inflation, an alternative asset class, and an innovative technology. BlackRock’s bullish stance on bitcoin reflects its recognition of the potential and significance of this emerging phenomenon that is reshaping the future of finance and society.