The world’s biggest asset manager, Blackrock Inc. (BLK) may be getting into cryptocurrencies and its underlying technology, blockchain. According to Financial News, the company has set up a team from different parts of its business to investigate cryptocurrencies. Blackrock’s chief executive officer, Larry Fink, said it had set up a working group to investigate blockchain and cryptocurrencies. “We are a big student of blockchain,” he told Reuters. He did not express similar sentiments about cryptocurrencies, though, saying that he does not see “huge demand” for them from investors. Fink had earlier called bitcoin “an index of money laundering” and said that it was a “speculative” investment. Blackrock is also on record as having said that it was “monitoring” cryptocurrencies and blockchain. (See also: Blackrock Keeping Cryptocurrencies On Its Radar).
In May of this year, three Blackrock analysts left the firm and started a $20 million venture capital fund Eterna Capital. Their aim was to attract institutional investors to cryptocurrencies. According to them, institutional investors are wary of risking their reputation by investing in or offering services related to cryptocurrencies. Apart from unremitting volatility, tales of market manipulation by bitcoin whales and hacks have garnered an unsavory reputation for cryptocurrencies. (See also: Why Did Bitcoin Whales Sell $100 Million Of Crypto).
Bitcoin Price Moves Up
Bitcoin’s price moved up in response to news of Blackrock’s interest in blockchain. It jumped by 6% to $6739 this morning before inching downward again. The original cryptocurrency is down by more than 50% since the beginning of this year due to negative sentiment about cryptocurrencies and selloff by major investors. At 14:43 UTC, bitcoin was trading at $6,694.70, unchanged from its price 24 hours ago.
Blackrock manages $6.3 trillion in assets. An endorsement or move by the firm to either invest in cryptocurrencies or utilize blockchain technology could result in significant mainstream traction for both. Other asset management firms, such as Fidelity Investments, have already conducted several tests to assess blockchain’s applications to their industry. Possible application areas for the technology in asset management include smart contracts and decentralized trading networks.
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