- The renowned asset management company and the cryptocurrency exchange have teamed up to increase institutional investors’ access to cryptocurrency.
- Coinbase and BlackRock’s mutual customers will have access to cryptocurrency trading, custody, prime brokerage, and reporting features.
The largest asset manager in the world, BlackRock, and cryptocurrency exchange Coinbase Global Inc. announced a partnership on Thursday to give organizational customers entry to custody and trading services for cryptocurrencies.
Following the announcement of the partnership, shares of cryptocurrency exchange Coinbase Global Inc (COIN.O) shot up more than 16% on Thursday. The announcement comes as the sector has been severely harmed by the infamous “crypto winter,” which has seen investors flee risky digital assets in the face of geopolitical unrest, rising interest rates, and concerns about a possible recession.
Additionally, cryptocurrency has suffered from the general sell-off in risky assets and the financial fallout from the Terra breakdown in the early summer. Many investors believe that institutional deployment is essential to advancing the development, constancy, and price of bitcoin as well as possibly the larger crypto market. The industry has seen numerous hacks and infringements, including this week’s breaches on Solana and Nomad.
Trading, custody, prime brokerage, and reporting functionality for cryptocurrencies will be offered by Coinbase. With more than $8 trillion in assets under management, BlackRock is the largest asset manager in the world.
As per alternative data provider Quiver Quantitative, the ticker COIN also surpassed GameStop in terms of popularity in the WallStreetBets chat room on Reddit on Thursday.
The news highlights how established institutions, such as banks, hedge funds, and pension funds, have been investing in crypto assets over the past 18 months, betting that the alternative asset class will endure.
According to Coinbase, its Prime platform, which provides services to hedge funds, corporate treasuries, and other investment firms, has been expanding its systemic client base.
As per Owen Lau, an analyst at Oppenheimer & Co., “After this validation, it’s possible that Coinbase will be able to partner with more conventional financial industries.” It demonstrates that despite BlackRock’s size, they are choosing to collaborate with a crypto-native business rather than developing its own capabilities.
The industry has seen numerous hacks and infringements, including this week’s breaches on Solana and Nomad.
This week’s unexpected increase in the price of Coinbase may have been caused by investors who were placing bets against the stock scrambling to close out their short positions, or a “short squeeze.” According to its filings, institutional trading volumes on Coinbase were $235 billion in the first quarter of 2022 compared to $74 billion for retail customers. Even though that institutional volume was lower than the previous three quarters, it was still higher than the same quarter a year prior by just over 9%.
BarrySilbert, the parent to Grayscale also shared the news on Twitter, saying it’s exactly a surprise how the BTC price didn’t move in response to the news. “It is a game changer”
It’s safe to say that this is truly a game changer. The collaboration of asset management behemoth BlackRock and publicly traded cryptocurrency exchange Coinbase to provide institutional investors with access to cryptocurrency trading services will assist expand the market of adoption much further. The cryptocurrency winter is not going to slow adoption at all.