Institutions are turning pro-crypto because of demand, not because they believe in it
“When BlackRock sneezes, the rest of the world catches a cold”
BlackRock CEO Larry Fink | Source: World Economic Forum (CC license)
When the average crypto skeptic changes their mind and dives down the rabbit hole, it’s hardly a newsworthy event. But it’s a different story when the CEO of the largest asset management company in the world performs an about-face.
Years ago, Larry Fink, the head honcho at BlackRock, panned bitcoin as an “index of money laundering.” Now, he touts the technology as digital gold and crypto as an international asset.
“Did Larry wake up one day and come to this epiphany?” Santiago Santos asks.
“No, I think there’s a lot of institutional demand.”
The angel investor spoke to Blockworks on the Empire podcast (Spotify/Apple) about the reasoning behind the CEO’s attitude shift, and the impact of BlackRock’s moves in the space.
“I don’t think Larry took it upon himself to read the white paper, came to a massive realization and then started sending bitcoin to friends and said, ‘Wow, my God! This is phenomenal!’”
“They are constantly in touch with their largest clients and they see the window here,” Santos says.
When BlackRock sneezes…
Podcast host Jason Yanowitz says people don’t realize just how influential Larry Fink is, arguing he is possibly “the most powerful capital markets person in the entire world.”
“People underestimate that.”
Fink is deeply politically connected, Yanowitz says. When the Federal Reserve “started printing [money] in 2020” and had to start buying corporate bonds to backstop the economy, he says, “Who did they turn to, to do it?”
“BlackRock and Larry Fink.”
“When the FDIC came to wind down the portfolios of Signature and Silicon Valley Bank, who did they have do that?”
“BlackRock.”
Santos explains the influence that BlackRock exerts over the broader economy. “When BlackRock sneezes, the rest of the world catches a cold.”
“They have positions in pretty much every major company.”
Changing the narrative
BlackRock’s validation of crypto as an asset class is “probably the most important event in a couple years,” Santos says. It is the necessary “catalyst,” he says, to “change the narrative.”
It all comes down to institutional demand, Santos says. “I think they have a lot of interest from clients. That’s the only reason why they would do it.”
Santos says Fink is a “very practical man” who understands how he can expand his franchise.
“This is an emerging asset class,” he says. “You’re gonna wanna capture it with an ETF.”
Yanowitz says about half of the top mutual fund groups have “CEO-driven crypto strategies.”
On the other hand, “half of those don’t have crypto strategies,” he says. “Those big mutual fund groups are going to be forced into the market by their customers.”
“They all will respond,” Santos says, “not because they believe in the space, but because they want to capture an opportunity that their clients, if not offered, will go elsewhere for.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
