16th June 2023 > > Blackrock.

tl;dr

The Blackrock news (see below) has given a little fillip to the market.

Market Snap

Market Wrap

The Blackrock news (see below) has given a little fillip to the market.

Curious Cryptos’ Commentary – BTFP (Bank Term Funding Program)

In response to the banking crisis earlier this year, the Federal Reserve created BTFP. BTFP allows banks to deposit government bonds as collateral against a cash loan to manage liquidity concerns. The objective is to prevent banks from selling US Treasuries at a loss in the event of a bank run.

It appears to have been wildly successful in dampening the contagion that threatened to engulf the US banking system just a few months back, and we should be thankful for that.

It has been reported that the program has now exceeded $100 billion. Meanwhile US banks are sitting on unrealised losses of $620 billion on US Treasuries bought when interest rates were points lower than today. That is a not insignificant amount suggesting that we are not out of the woods yet.

BTC is the only bulwark against the ongoing meddling and fiddling by Central Banks and their government masters.

Curious Cryptos’ Commentary - Blackrock

Blackrock is the largest asset manager in the world with around $10 TRILLION assets under management.

The firm has filed for a spot-BTC ETF (exchange traded fund) naming Coinbase as its custodial services provider.

Well, well, well. What do we make of this move?

Blackrock almost single-handedly built the ETF business, so it’s fair to say that it knows its way around this product and knows in detail all the compliance and regulatory rules. Senior management will be in constant contact with the SEC (Securities and Exchange Commission) on all manner of topics including BTC. It seems inconceivable to me that they would make this application without a strong degree of confidence in gaining SEC approval.

The SEC has rejected spot-BTC ETFs in the past. Not because of securities laws (even the SEC has conceded BTC is a commodity and not a security) but because of what the SEC believes are the perceived risks of market manipulation, which makes little sense as it has previously approved futures based BTC ETFs. You will recall that the first of these products was a key factor at the time in driving BTC to its ATH of nearly $70k until the true costs to investors of this product (as warned by the CCC) became generally known.

Blackrock clearly sees a business opportunity driven by its clients’ needs. If this application is successful, it will bring in a tonne of investors both retail and institutional into the crypto world. And that is an exciting prospect, for obvious reasons. Mike Novogratz, CEO of Galaxy Digital, agrees with me:

“And yes, @BlackRock getting a $BTC ETF through would be the best thing that could happen to $BTC.”

…

Predictably the maximalists are out decrying this news claiming it heralds Wall Street’s takeover of the crypto world.

There is no doubt in my mind that if – and it is still a big if – this application for a spot-BTC ETF gains SEC’s approval that will light a fire to the crypto markets. Perversely, alts may well outperform in that scenario though there is no direct benefit to them.

But to the maxis who are claiming that Wall Street will buy up BTC on the cheap I have one simple piece of advice if that is what is worrying you.

Don’t sell.