BlackRock’s latest filing from the Securities and Exchange Commission (SEC) shows that the company has earned considerable profits from its investment in Bitcoin futures in 2021. The recent monthly report quoted the Chief Investment Officer, Rick Rieder, saying, “we have dabbled in cryptocurrencies.”
The detail of the report made available to news reporters today reveals that the company had 37 Bitcoin futures contracts issued via Mercantile Exchange expired on March 26. The futures gained $360,457. The Bitcoin investment profit accounts for approximately 0.00142% of the firm’s Global Allocation Fund (GAF) as of March 31, 2021. The firm has $8.6 trillion in total Assets Under Management (AUM).
Many investors want to hold Bitcoin, says BlackRock’s CIO
Recently the company’s CIO, said BlackRock had joined the crypto community, noting that many investors were interested in holding Bitcoin because of its status as a possible store of value and a hedge against inflation.
Rieder said putting your cash in assets such as cryptocurrencies is a very reasonable way of investing, but he wouldn’t fix a certain percentage of your portfolio that should go into the crypto investment. He added that financial technology has developed to a level where many investors expect cryptocurrencies to be a major part of their portfolios.
During its monthly report, BlackRock had cited Bitcoin as a possible asset it would consider investing in. Bitcoin appeared in the firm’s January SEC filing 25 times. The multi-trillion dollar company, which is also the largest asset manager worldwide, gave a hint of possible Bitcoin investment during its two separate filings: BlackRock Funds and Global Allocation Fund. But then, none of the filings was explicit in its statement whether it would invest fully in Bitcoin now or in the foreseeable future.
BlackRock’s Executives had given the hint of Bitcoin investment in the past
However, the content of the prospectus stated that each of the two Funds could invest in derivatives, a term used for financial assets that derive their value from currencies (either fiat or Bitcoin), commodities (including gold, silver, oil, etc.), interests, indices (which measures value like the S&P.
The firm also referred to Bitcoin during its reference to risky derivatives. It stated that Bitcoin might cause illiquidity risk because If its low trading activity compared to other liquid futures such as currencies. The reason is that Bitcoin is a new form of investment.
Since last year, BlackRock’s executives have, in different fora, been giving the hint of possible investment in Bitcoin, as they kept tab on the continuous adoption of cryptocurrencies by influential individuals such as Elon Musk and institutional investors like GrayScale, Square, and others.
Last year, Rieder said he was optimistic that Bitcoin, which is also regarded as the yellow metal, would outrank gold as the store of wealth and hedge against inflation. Likewise, BlackRock’s CEO, Larry Fink, said he had been attracted to Bitcoin, and was sure the digital asset would gain a broader acceptance in the future.
According to a media report last month, BlackRock was planning to hire a crypto expert as a vice president. The ‘blockchain VP’ will be charged with attracting investors to the company’s crypto offerings.
