$BTC: ARK Invest Explains Why the Bitcoin Price Could Go Up by $200,000 to $500,000

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On Mon­day (August 8), asset man­age­ment firm ARK Invest­ment Man­age­ment LLC (AKA “ARK Invest” and “ARK”) explained why it found the recent­ly-announced part­ner­ship Black­Rock and Coin­base bull­ish for Bitcoin.

ARK Invest, which was found­ed by Cather­ine Wood in 2014. In issue #328 of its newslet­ter, which was pub­lished yes­ter­day, cryp­to ana­lyst Yas­sine Elmand­jra took a clos­er look at an impor­tant announce­ment that was made last week.

Last Thurs­day (August 4), Coinbase’s Brett Tej­paul (who is Head of Coin­base Insti­tu­tion­al) and Greg Tusar (who is Head of Insti­tu­tion­al Prod­uct) pub­lished a blog post, in which they stat­ed that Coin­base and Black­Rock were going to “cre­ate new access points for insti­tu­tion­al cryp­to adop­tion by con­nect­ing Coin­base Prime and Aladdin.”

The blog post went on to say that “Coin­base is part­ner­ing with Black­Rock, the world’s largest asset man­ag­er, to pro­vide insti­tu­tion­al clients of Aladdin®, BlackRock’s end-to-end invest­ment man­age­ment plat­form, with direct access to cryp­to, start­ing with bit­coin, through con­nec­tiv­i­ty with Coin­base Prime.” Appar­ent­ly, Coin­base Prime will “pro­vide cryp­to trad­ing, cus­tody, prime bro­ker­age, and report­ing capa­bil­i­ties to Aladdin’s Insti­tu­tion­al client base who are also clients of Coinbase.”

Joseph Chalom, Glob­al Head of Strate­gic Ecosys­tem Part­ner­ships at Black­Rock, had this to say:

Our insti­tu­tion­al clients are increas­ing­ly inter­est­ed in gain­ing expo­sure to dig­i­tal asset mar­kets and are focused on how to effi­cient­ly man­age the oper­a­tional life­cy­cle of these assets. This con­nec­tiv­i­ty with Aladdin will allow clients to man­age their bit­coin expo­sures direct­ly in their exist­ing port­fo­lio man­age­ment and trad­ing work­flows for a whole port­fo­lio view of risk across asset class­es.

Max Branzburg, VP of Prod­uct at Coin­base, made sev­er­al great obser­va­tions in a Twit­ter thread post­ed that day, two of which were:

  • Aladdin is Blackrock’s port­fo­lio man­age­ment soft­ware that pro­vides invest­ment pro­fes­sion­als a way to view and man­age dai­ly invest­ments. Impor­tant­ly, Aladdin also serves ~300 oth­er large asset man­agers, rep­re­sent­ing anoth­er $22 tril­lion in AUM.
  • It can­not be under­stat­ed how impor­tant Aladdin is for insti­tu­tions. Man­ag­ing invest­ments with­out it is extreme­ly dif­fi­cult. Now Coin­base Prime will pro­vide cryp­to trad­ing, cus­tody, prime bro­ker­age, and report­ing to this mas­sive new client pop­u­la­tion.
  • With today’s announce­ment, Coin­base is enabling tril­lions of dol­lars to enter cryp­to.




Any­way, here is what the ARK ana­lyst said about this partnership:

Blackrock’s deci­sion to part­ner with Coin­base is a strong sig­nal that insti­tu­tions con­sid­er crypto––starting with bitcoin––a new asset class. We agree that bit­coin has earned an allo­ca­tion into well diver­si­fied portfolios.

Based on dai­ly returns across asset class­es dur­ing the past ten years, our analy­sis sug­gests that an allo­ca­tion to bit­coin in well diver­si­fied port­fo­lios should range from 2.55%, when min­i­miz­ing volatil­i­ty, to 6.55%, when max­i­miz­ing returns per unit of risk…

In this analy­sis, we ran a Monte Car­lo1 sim­u­la­tion of 1,000,000 port­fo­lios com­posed of var­i­ous asset class­es. The effi­cient fron­tier cap­tures the high­est returns pos­si­ble for a giv­en lev­el of volatil­i­ty. The stars indi­cate allo­ca­tions asso­ci­at­ed with max­i­miz­ing the Sharpe Ratio and min­i­miz­ing volatility.

Based on ARK’s sim­u­lat­ed port­fo­lio allo­ca­tions, insti­tu­tion­al allo­ca­tions between 2.5% and 6.5% could impact bitcoin’s price by $200,000 and $500,000, respec­tive­ly, as shown below.

Accord­ing to data by Trad­ingView, on Binance, cur­rent­ly (as of 4:16 p.m. UTC on August 9) Bit­coin is trad­ing around $23,106.

Source: Trad­ingView

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Fea­tured Image via Pix­abay

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