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ARK Invest: BlackRock Coinbase tie-in ‘could draw trillions’ in institutional cash

By Daniela Ešnerová


Updated

BlackRock (BLK) logo on a phone display. – Photo: Shutterstock
Coinbase and BlackRock partnership is “by far the strongest signal we’ve seen around institutions considering crypto as a new asset class,” ARK’s analyst Yassine Elmandjra says. – Photo: Shutterstock

The partnership between Coinbase (COIN) and BlackRock (BLK) ‘could usher trillions of dollars into the crypto industry in the coming years,’ Ark analyst, Yassine Elmandjra, said during a monthly portfolio update on Tuesday.

Elmandjra called the partnership between the biggest listed cryptocurrency exchange and the world's biggest asset manager ‘definitely a big win for not just Coinbase, but for the broader crypto asset class.’

Ark's flagship investment vehicle, its $14.5bn ARK Innovation’s (ARKK) ETF overseen by Cathie Wood, sold $75m worth of COIN shares. The sale prevented Ark from fully capitalizing on COIN's surge following the BlackRock deal announcement. But Ark is still one of Coinbase's largest shareholders. On Wednesday, Ark's website showed that Ark's investment in Coinbase was valued at about $420m.

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ARK Innovation ETF (ARKK) price chart

BTC could go $200,000 and $500,000 on the back of the institutional cash

Asked about the partnership, which will give BlackRock's institutional clients access via Coinbase Prime platform, Elmandjra offered a bullish outlook.

He called it “by far the strongest signal we’ve seen around institutions considering crypto as a new asset class and that Wall Street is finally ready to make the leap here.” 

He then went on to share findings from ARK's analysis, which concluded that based on BTC returns over the last ten years, well-diversified portfolios should include 2.5% - 6.5% based on investor risk tolerance. Based on these figures,  BTC allocations of 2.5% - 6.5% to institutional portfolios could impact bitcoin’s price by $200,000 and $500,000, respectively, according to Ark's simulation.

BTC/USD

70,344.25 Price
+1.120% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.54 Price
+1.010% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.17 Price
+7.060% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BCH/USD

516.90 Price
+2.180% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

BTC to US Dollar price chart

Big win for COIN and crypto

“This is definitely a big win for not just Coinbase, but for the broader crypto asset class,” Elmandjra said about the BlackRock partnership.

COIN shares have been on a rollercoaster lately, as there was no shortage of market-moving news about the US's biggest cryptocurrency exchange. 

Coinbase Global, Inc. price chart

COIN plunged at the end of July when the news broke that the Securities and Exchange Commission is probing the company for insider trading, but they rallied soon after when the partnership with the world's biggest asset manager was revealed. 

However, COIN shares then erased almost all of their gains after disappointing earnings, which missed analysts' already dire estimates. COIN's revenues in the second quarter of the revenue were down 64% year-on-year amid the digital assets market downturn.

Markets in this article

BTC/USD
Bitcoin / USD
70344.25 USD
778.6 +1.120%
COIN
Coinbase Global Inc (Extended Hours)
229.55 USD
4.34 +1.940%
ARKK
ARK Innovation ETF
45.40 USD
-0.46 -1.010%
BLK
BlackRock
805.50 USD
-0.32 -0.040%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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