Bitcoin is the obvious choice (BTC -1.42%) if there’s one crypto to invest in right now. There’s a major change in the investment industry right now, and it’s all because of Bitcoin. In early August, Coinbase announced that it had joined forces with BlackRock, the world’s largest asset manager (BLK 0.47%), to offer cryptocurrency investment services for wealthy private clients and big institutional investors. To put it another way, Bitcoin is no longer only suitable for the small guys.
Within hours of the news, Bitcoin price predictions reached as high as $773,000 (from about $24,000 today), according to The Sun. You’re catching on. It’s easy to see why the partnership between Coinbase and BlackRock is significant. In a nutshell, the collaboration agreement allows major institutional investors – such as mutual funds, pension funds, foundations and endowments – to invest in cryptocurrencies using a custody solution from Coinbase. There will be upward pressure on the Bitcoin price due to the large amount of money chasing it. Now is the time to get in; you don’t have much time left.
The Coinbase/BlackRock deal
Consider that Forbes said it was “$10 trillion earthquake,” since BlackRock manages $10 trillion in assets from some of the world’s most important investors. Even if you take a cautious approach, BlackRock clients will likely start to put a tiny portion (maybe 1%) of their assets into crypto. Even a little shift in allocation might be enough to send Bitcoin skyward. We’re dealing with enormous figures here. One percent of $10 trillion is $100 billion, and they’ll all be seeking a new home in the crypto world. To put it another way, today’s total market capitalization for Bitcoin is around $460 billion.
Yes, not all of that $100 billion will be spent on Bitcoin, but it’s a sure thing that investors will pay attention to the cryptocurrency. If big institutional investors truly do consider crypto to be a brand new, well-defined asset category, this will have a substantial influence on asset allocation. Traditional asset classes such as equities and bonds used to be important focuses for big institutional investors. However, in the 1990s, they began investing in riskier asset classes like real estate and private equity in order to enhance earnings and hedge overall market risk. That practice is continuing now with the introduction of bitcoin. These same investors are going to put a tiny portion of their portfolios into bitcoin, along with all of their other alternative investments. That’s why this is such a significant shift: Bitcoin will become more popular among the super-wealthy and large players in finance.
Because of this, we’re now in the golden era of Bitcoin buying. It will be much more difficult to obtain a good price once the major institutional investors realize they want to get involved in the Bitcoin market. This is not about “buying the dip” and hoping that Bitcoin goes up in value. This is about reacting to a significant shift in thinking currently taking place in the market. The easiest way to respond is by purchasing Bitcoin.