BlackRock, the world’s largest asset manager, has purchased about 11,500 bitcoins in recent days, an amount that represents almost 13 days of production of the digital currency. The move came after the launch of its spot Bitcoin ETF, which marks a major turning point in the history of Bitcoin and cryptocurrencies.
BlackRock’s massive purchase is indicative of Bitcoin’s growing acceptance as a viable asset class. BlackRock CEO Larry Fink stated that his views on Bitcoin have evolved over the years and now views the cryptocurrency as a legitimate investment.
#Blackrock cost 11,500 $BTC out delivery within 2 days
900 Bitcoins are issued daily, and you can see how Blackrock moved their cash supply to Bitcoin last night, buying the dip. Now they mainly own Bitcoin.
The main point is that 11,500 BTC were withdrawn from the system in two days… pic.twitter.com/GzoEk2uMSl
— InvestAnswers (@invest_answers) January 13, 2024
The BlackRock Effect: How Purchasing 11,500 Bitcoins Could Affect Global Supply
BlackRock’s action signals a potential supply crisis in the Bitcoin market. It is estimated that approximately 46,000 BTC were withdrawn from the market in the last two days, which is approximately 25.5 times the daily production.
The situation is being exacerbated by additional demand from retail investors and other global ETFs, putting further pressure on the available supply of Bitcoin.
Despite price fluctuations, Bitcoin has shown resilience. The success of BlackRock’s ETF, despite its high costs, signals growing institutional interest, representing a new era of market scarcity, a change that could have lasting consequences for the cryptocurrency’s price and availability.
The first few days after the approval of the new ETFs saw substantial capital inflows, totaling $4.3 billion.
BlackRock led the ETF race with its iShares Bitcoin Trust (IBIT), closely followed by the Fidelity Advantage Bitcoin ETF (FBTC) and Bitwise (BITB). Such funds have attracted significant investment, reflecting growing investor interest.
On the other hand, Grayscale Bitcoin Trust (GBTC), one of the largest Bitcoin holders, experienced outflows of $579 million, partly as investors turned to new ETFs with more attractive fees.
ETF analysts had previously predicted that Bitcoin ETFs could attract around $10 billion in their first year of operation. Recent market activity suggests this prediction could become a reality given rapid adoption and capital inflows.
This trend indicates greater maturity and acceptance of Bitcoin as a legitimate investment by major financial institutions. BlackRock, with its vast influence and resources, could be a catalyst for the mainstream adoption of Bitcoin and other cryptocurrencies.
BlackRock’s purchase of 11,500 Bitcoins has a profound impact on the global supply of Bitcoin, mainly due to the finite nature of the cryptocurrency. Any Bitcoin purchased by BlackRock is withdrawn from the circulating market, reducing the amount available to other investors and traders.
This becomes even more important considering that Bitcoin has a maximum issuance of 21 million coins, with a number of new coins halving approximately every four years – an event known as halving.
When an entity the size of BlackRock buys such a large amount, it could put upward pressure on the price of Bitcoin. The reason is simple: the law of supply and demand. With fewer bitcoins available for purchase and constant or increasing demand, the price tends to rise.
Moreover, these types of actions from BlackRock can be interpreted as a sign of confidence in Bitcoin’s long-term value. When a major financial institution invests heavily in Bitcoin, it can encourage other institutional and individual investors to do the same, further increasing demand.
Finally, the large-scale purchase of Bitcoin by an influential entity like BlackRock also impacts the market’s perception of the cryptocurrency. It is seen as a legitimate and viable investment for large institutions, which can attract more participants to the market and, again, influence demand.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
