The price of Bitcoin is on the rise once again thanks to a recent report that investment firm BlackRock is looking into the potential uses of cryptocurrencies and blockchains. Initially reported by Reuters, the latest rumors suggest that BlackRock CEO Larry Fink has set up a group to investigate the underlying infrastructure of digital currencies.
For industry analysts and investors, the revelation is reason to be bullish given Fink’s previous position on the topic. Although the man himself has moved to calm the enthusiasm by stating that none of the company’s clients have inquired about crypto investments. However, the news that he is overseeing an internal thinktank seems to be a far cry from his recent comments that cryptocurrencies are nothing more than an “index of money laundering.”
Attitudes to Cryptos Are Changing
While many would dispute that, the summary wasn’t made without good reason. Despite its positives, cryptocurrencies aren’t immune from criminal activity. The Ethereum Twitter scandal involving Elon Musk is just one example of how those with bad intentions are exploiting the technologies anonymous protocols. Although cybercrime is likely to remain an issue for cryptos in the same way it plagues all online technology, things are changing. As established companies start to embrace blockchains and more, a new era of regulation and control is taking hold. Indeed, following the news that the Swiss Stock Exchange will soon be launching a platform to regulate cryptos, traders have once again become interested in the price of Ethereum and its peers.
As a result of this continued move towards legitimacy, BlackRock is interested in how it can turn the positive aspects of cryptos into a money-making venture. Being the largest asset manager in the world with $6.3 trillion in assets, BlackRock has the power to make Bitcoin et al a mainstream commodity. With a large portion of the investment elite’s resources under its control, Fink’s company can essentially move the needle with a single swipe. Put another way, if BlackRock backs cryptos and moves its assets into the market, the price of every major coin could moon.
However, before traders could get too excited, the investment firm clarified that crypto technology had been a point of interest for the last three years.
“Like most financial institutions, BlackRock has had a working group since 2015 that meets periodically to exchange information on blockchain and consists of employees from various parts of the business. We have been looking at blockchain technology for several years, recognizing potential for shared processes and data across market participants, clearing, settlement and reconciliation and simplified securities issuance,” a spokesperson for the company told CNBC.
The Market Moves in Positive Ways
Irrespective of when the group was formed and what its intentions are, the Bitcoin price index has reacted. When the story broke on July 16, trading was up 4.4% to push the value of a single BTC coin to $6,600. While that’s still a significant clip below the near $20,000 high seen in 2017, interest from BlackRock is being taken as a positive. Should the company’s analysts recommend crypto investments to its clients, new capital could flood the market. While that won’t necessarily ensure the long-term survival of cryptocurrencies, it could be a sign of things to come. Fidelity Investments has already been active in the crypto space and more asset managers are now eyeing up the market following BlackRock’s announcement.
“It definitely is causing some excitement. The idea of big financial firms moving into crypto certainly isn’t new, and this is a trend we’ve been noticing gaining strength since November,” Mati Greenspan of eToro told CNBC on July 16.
Given the fall from grace Bitcoin and its peers experienced at the start of 2017, analysts are starting to find a renewed sense of hope for the market. Now the hype has subsided, multiple businesses, investors and regulatory authorities are starting to take the technology seriously. From South Korea’s plans to regulate the industry to Opera releasing an integrated browser-based wallet, a variety of entities are working to explore different facets of the crypto world.
In practice, this means we’re starting to see cryptos influence data processing, banking transactions and move a step closer to becoming a mainstream currency. When these forces are taken as a collective, the future looks bright. While the true trajectory of the industry may still be unclear, more investment can only be a good thing. Whether or not BlackRock’s thinktank redefines the market remains to be seen. However, as is often the case, any publicity is potentially good publicity.