Have you ever heard of BlackRock? It is the largest global investment fund (in billions of euros managed). At the beginning of May, this financial giant officially launched its ETF dedicated to cryptocurrencies. Appointed iShares Blockchain and Tech ETF (IBLC), it is accessible to more traditional investors via ordinary securities accounts. But what does this mean for cryptos in practice?
Crypto ETFs: more investors and a rise in long-term prices
By creating an ETF, Blackrock allows cryptocurrencies to go beyond their usual circle of investors. To understand this, we have to go back to the logic of ETFs. Concretely, an ETF (acronym for Exchange Traded Fund) is a fund in which anyone can invest. Each share of the ETF increases the amount of funds managed. With this money, BlackRock invests in cryptocurrencies, and replicates cryptocurrency pricess exactly.
In other words, this means that ETFs make it possible to bring in new funds to invest in cryptocurrencies. And, according to the law of supply and demand, this cash contribution mathematically increases the price of cryptocurrencies, all other things being equal.
Blackrock sends a signal effect for other investment funds
The impact of this news far exceeds the magnitude of theETF launched by BlackRock in himself. Indeed, many investors (individuals, professionals and institutions) reproduce the behavior of BlackRock in a logic of mimicry. This means that billions of additional euros will abound in the cryptocurrency sector, from follower investors, who are more cautious about this asset.
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This massive influx of new savers also partly explains phenomena such as the fall of the Lunaor the recent drop in bitcoin. Because these new investors are the first to unwind an unfavorable position, because they are afraid of this type of asset, for lack of really knowing cryptocurrencies.