BlackRock & Barclays Share Contrasting Views on Bitcoin (BTC), Institutional Game Getting Interesting

As Bitcoin (BTC) continues to trade at a crucial junction, there’s a mix of views coming from institutions at the current time. On Wednesday, January 20, the world’s largest asset manager BlackRock filed with the U.S. SEC seeking exposure to bitcoin (BTC) Futures investment for two of its funds – the BlackRock Funds V and BlackRock Global Allocation Fund, Inc. The SEC filing submitted by BlackRock reads:

“Certain Funds may engage in futures contracts based on bitcoin” adding that A” Fund’s investment in bitcoin futures may involve illiquidity risk, as bitcoin futures are not as heavily traded as other futures given that the bitcoin futures market is relatively new.”

BlackRock has also clarified that its funds might invest in cash-settled Bitcoin futures that are traded on commodity exchanges registered with the CFTC. On one hand, when BlackRock is looking for an entry into Bitcoin (BTC), the Barclays Private Bank presents an absolutely contrasting view. Gerald Moser, chief market strategist at Barclays stated that Bitcoin isn’t a viable asset for heavyweight investors to hold in their portfolio. Mr. Moser said:

“While it is nigh on impossible to forecast an expected return for bitcoin, its volatility makes the asset almost ‘uninvestable’ from a portfolio perspective. With spikes in volatility that are multiples of that typically experienced by risk assets such as equities or oil, many would probably throw the cryptocurrency out of any portfolio in a typical mean-variance optimisation.”

Barclays is not the only institution opposing Bitcoin. Recently, wealth management giant UBS said that cryptocurrencies including Bitcoin can go to zero. However, the fact remains that billionaire investors like Paul Tudor Jones, Stanley Druckenmiller, Scott Minerd, and many others have endorsed investments into the world’s largest cryptocurrency.

The Grayscale Bitcoin Trust (GBTC) which is a safe haven for institutions to gain exposure to Bitcoin has poured billions of dollars in aggressive Bitcoin purchases in recent times. Grayscale has revealed that a majority of inflows in GBTC are coming from institutions.

But, amid all the institutional frenzy around Bitcoin (BTC), lawmakers can play a spoilsport in the entire game putting a spanner in the wheel of ‘institutional Bitcoin buying’.

U.S. Treasury Secretary Nominee Janet Yellen Calls for Curtailing Cryptocurrencies

In recent times, just as Bitcoin continues to gain popularity among financial institutions, lawmakers have turned out to be more hostile towards it. On the day when the 46th U.S. President Joe Biden took the oath, former Fed chairperson and treasury secretary nominee Janet Yellen called the need to “curtail” the use of cryptocurrencies.

Yellen said that Bitcoin and other cryptocurrencies are mainly used for illegal activities like terror financing. This clearly suggests that the incoming Biden administration could be hostile to cryptocurrencies. “I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels,” said Yellen.

Yellen’s comments come a week after ECB President Christine Lagarde slammed Bitcoin calling it a “funny business” and a “speculative asset”. Similarly, former IMF chief economist Raghuram Rajan called Bitcoin “a classic bubble”.

With such disparity between the institutions and lawmakers, we can possibly see the two sections locking horns in near future.