The Crypto Future For Institutional Investors
Although it may seem somewhat repetitive, the Bitcon ETF is a historic event for finance, now there is a financial product that can be trusted by institutional investors, however, what is the next step for institutional investors to further embrace blockchain technology? Or will it all just end at the Bitcoin ETF? The truth is that institutional and investors know the great strengths of not only Bitcoin, but also the technology behind cryptocurrencies, so based on this uptick in confidence and some statements that were made last week, we can speculate a bit about the future of the love-hate relationship between cryptocurrencies/blockchain and institutional investors for the next few years.
To open the panorama I must mention Larry Fink, the chairman of BlackRock, this is such a big and influential company in the whole world, that it is impossible to ignore the statements he can make on camera, in fact, the important network CNBC has published the interview of the chairman of the biggest and most influential investment fund on the planet, and it is this interview that can give us a look into the future and at the same time, how is BlackRock's position in front of the current financial system.
Ether ETF
The native currency of the Ethereum network, is possibly the closest target after the approval of the Bitcoin ETF for institutional investors, according to Larry Fink himself, who has mentioned in the interview "I see value in having an ETH ETF", it is not a comment from an ordinary person, so from the moment of the approval of the BTC ETF we can now think about the Ether ETF, although this could be a very different battle to that of Bitcoin.
Ether (ETH), experienced a significant price boost, even more than Bitcoin after the historic news of the spot ETF approval. While BTC retreated by as much as 6%, Ethereum's native currency, on the other hand, was less volatile, retreating by less than 2% at times after experiencing a boost of more than 15% in the days leading up to the eagerly awaited BTC news.
All this tells us that not only did money flow into Bitcoin after the approval of the spot ETFs, it means that institutional investors may be buying ETH while the eyes of the world are on Bitcoin. This is a recurring theme in the market, by understanding their behaviour we can analyse that in many cases institutions make moves long before the news hits the airwaves. This move is confirmed after that statement and optimism about a new ETF, but this time within Ethereum.
Tokenization
Following on from Larry Fink's interview, we note that he has been giving an optimistic speech about tokenization, mentioning the phrase "these are just the first steps towards tokenization", even mentioning that this is the future of many assets. For Larry Fink tokenization is simply the future, however, there is still a long way to go, starting with getting institutional approval and then making new laws that may allow it, however, Fink has been in favour of tokenization for some time now.
Ether (ETH) is a strategic point to see tokenization as a financial model in the future, many tokens in the crypto market, are based on Ethereum technology, many of them widely used, as well as the fact of having greater economic strength being the main reference in Cryptocurrencies only behind Bitcoin, its technology can serve to create tokens of all kinds and possibly that aims BlackRock, generate confidence and have financial products for investors to buy some "raw material" for future tokenizations of assets.
Why is BlackRock betting on asset tokenization?
In the CNBC interview, Larry Fink says "We have the technology today to tokenise," he added. "If we had a tokenised security ... the moment we buy or sell an instrument, you know it's on a ledger that's created all together. ... This eliminates all corruption by having a tokenised system".
In this sentence we must monitor the word corruption, which he subtly introduces, implying that we must evolve to a less corrupt system that at the same time has had signs of fragility in recent years, BlackRock being one of the entities that has made mention of this issue for some time now.
One of BlackRock's concerns is the debt crisis that is growing every year in the United States.
According to this article from cointelegraph, written in mid-2023, Fink is aware of the huge crisis that could engulf the world from the US debt, which is being extended as the government decides to raise the debt ceiling every year and thus continue to run up debts as if nothing had happened. We all know what happens when investors see that a person, a company or even a country is prone to default on its debt, given that the US economy has been on a fiscal deficit trend.
This fragility we can remember with the failure of banks like SVB and other financial institutions in 2023, they are a sign of the hole in a corrupt system, so BlackRock is betting on a future with tokenised assets, a more transparent model due to its easy auditing, but which can also be less complex and friendlier for investment management.
Conclusions:
BlackRock understands that Bitcoin and Ether are deferent assets, one may be the future option for financial safekeeping, similar to the traditional view of gold in the face of financial crises, becoming a haven of value to be reckoned with in an increasingly fragile system, furthermore, Ether may be the gateway for tokenization, seen as possible raw material for the creation and adoption of tokens.
ETFs are instruments that can bring investors closer to "riskier" assets, but the confidence of institutional investors is growing, especially with the optimism of BlackRock, whose influence in the world of finance is beyond our imagination.
For them the next target is the ETH ETF and then tokenization, that is the future set out by one of the most important companies on the planet and that will most certainly attract the gaze of other financial institutions and politicians in favour of a future that many of us dared to think about long before the Bitcoin ETF.
This is positive for the entire crypto ecosystem.
The Bitcoin ETF is important for institutional adoption and confidence, however, a potential ETH ETF opens the door for altcoins and puts them on the map for big investors, especially those with a blockchain that allows them to build on their network and provide solutions to various problems.
It is a good day to be in favour of blockchain technology and cryptocurrencies.
If you want to know more about the CNBC interview, here is the link
Thank you for your reading, until next time