The Wolf Den #557 - The World’s Largest Money Manager Is Here

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For years, crypto speculators have wondered how and when BlackRock would make its grand debut into the crypto space. The $10 trillion investment management company, unparalleled in size and strength, has finally broken the ice in a meaningful way. BlackRock is partnering with Coinbase to offer clients of Aladdin (BlackRock’s end-to-end investment management platform) direct access to crypto, starting with Bitcoin.

Before I get into the details of this partnership, I want to recount the dominant narratives from the previous era, i.e. 2017. At the time, the popular idea was that “the institutions are coming” and “the flood gates are opening.” We all believed it, but the reality could not have been further from the truth. We were a full market cycle away from any meaningful institutional interest. Fast-forward 5 years and the biggest institution in the world is here.  

I will save my thoughts on whether we should cheer this adoption or not for another day. Many view BlackRock like the Empire in Star Wars - they are not exactly a benevolent operation. Cheering their entry into the space makes sense for widespread adoption and the number going up, but requires a bit of cognitive dissonance for those looking to opt out of broken and oppressive systems. Bitcoin was created to rage against this very machine.

But I digress.

BlackRock’s clients clearly want access to the asset class.

Here’s what we know about BlackRock in the crypto space:

2017 - “Bitcoin just shows you how much demand for money laundering there is in the world. That’s all it is.” - BlackRock CEO, Larry Fink

2021 - BlackRock earns $360,000 trading Bitcoin futures by holding $6.5 million in CME contracts. The holdings represented 0.03% of the firm’s AUM and the gains represented just 0.0014%.

2022 - BlackRock is reportedly studying digital currencies, stablecoins, and the underlying technologies to understand how they can help serve their clients.

Today - BlackRock opens the floodgates for institutions by partnering with Coinbase.

So why Coinbase? And what exactly is Aladdin? Well, if you have paid attention to Coinbase’s growth over the past year, you may have noticed that they have become far more institution-focused and friendly. Once just a speculative casino for newcomers, Coinbase has greatly improved as a full-service platform for the largest market participants. Just this week, Coinbase Prime added Ethereum as a staking option for institutions. Custody, financing, data, and advanced trading have also improved tremendously. Like an Olympian who has trained for a lifetime for their 10 seconds of fame, Coinbase has been preparing for this moment since inception.

As for Aladdin, it was developed in 1988, and is known as BlackRock’s market ‘advantage,’ bringing clarity to institutional investors. In 2020, Aladdin handled $21.6 trillion worth of assets, which is over 4% of the world’s wealth. It is connected to over 55,000 investment professionals. In this deal with Coinbase, Aladdin is providing the clients and Coinbase is providing the tools.

BlackRock’s head of strategic partnerships said this - “our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets.”

Considering the shit storm of bad news that I am accustomed to writing about, I think today is a definitive win. Institutions clearly share our vision, and so do their clients, even if they are only here because they think there is a greater fool who will buy the assets for more money down the road. BlackRock is going to force the hand of every competitor and the world’s money will trickle into crypto.

This will take time.

We thought the institutions were coming back in 2017. Then we thought they were coming in mid-2021 after Saylor’s conference. And after 5 years, we are still incredibly early…

To read the official announcement, click HERE.

All eyes are on the red 200 MA coming into the weekly close on Sunday. That’s it. We want to see it hold.

A break of $32,375 (good luck with that) would finally be a higher high and a break in bearish market structure.

We have ways to go.

Bitcoin continues to make a series of higher highs and higher lows since the bottom in the 17s. That’s a good thing. Notably, Bitcoin just bounced directly off of key local support at $22,401, which was the top of the range that was formed after that drop.

Things are still looking decent on smaller time frames.

What to watch this week:

Some of the main moves in markets:

In order to fund its virtual reality projects, Meta is preparing to offer bonds with maturities ranging from 5 to 40 years. The amount of the raise is undisclosed. This announcement marks the first time that the company will enter the bond market. Meta just recently received an ‘A1’ rating from Moodys and a ‘AA’ rating from the S&P, so the timing makes sense. The company is the only major tech company with zero debt and the bond market is starting to look juicy.

MSTR stock jumped 15% within 24 hours of Saylor stepping down from the CEO position. Correlation does not necessarily imply causation here.

Even with Saylor playing less of a role, MicroStrategy is still one big Bitcoin long. The entire business rests on the (macro) Bitcoin strategy.

His role at the company is irrelevant. Bitcoin’s redemption arc in the next cycle will be matched by Saylor’s, and he will likely go down as one of the greatest investors of all time.

Unless, of course, Bitcoin fails. But none of us believe that will happen.

According to crypto-friendly senator Cynthia Lummis, every U.S crypto exchange is being investigated by the SEC. Reports indicate that up to 40 files are open, each at varying levels of the process. Based on the history of the SEC in the space, the worst case scenario are likely fines levied against those found “guilty” of a non existent violation, or of something they did in the past that somehow breaks a law that is yet to exist.

The SEC is way in over its head and is grasping for power.

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