BlackRock picks Coinbase for institutional Crypto adoption

Crypto took another step on the path towards institutional adoption this week. Coinbase is joining forces with BlackRock, the largest asset manager in the world to ‘provide Aladdin clients access to crypto trading and custody via Coinbase Prime’

Only a few weeks ago, crypto was in meltdown and Coinbase was struggling to maintain staff morale. We covered that here: Challenging times for any CEO. Can Coinbase pull it around soon or is there more pain ahead…?

Coinbase shares were already picking up steam and this news was a catalyst to push the stock even higher on Thursday, gapping up on the open and posting a high of 116 before sellers pushed back. The stock closed the day in the red at 88.59.

Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock explained the partnership:

“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 (BlackRock’s end-to-end investment management platform) 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.”

The partnership will start with Bitcoin only and may develop to include other crypto assets over time. Coinbase is understandably enthusiastic about the opportunity.

The Coinbase partnership between BlackRock and Aladdin is an exciting milestone for our firm. As the trusted partner enabling institutions to participate and transact in the cryptoeconomy, we are committed to pushing the industry forward and creating new access points as institutional crypto adoption continues to rapidly accelerate.

We are honored to partner with an industry leader and look forward to furthering Coinbase’s goal of providing greater access and transparency to crypto.

There’s still the question of just how much added revenue this will bring to Coinbase’s business (and we may hear more on this at the company’s earnings report on Tuesday), although there's an argument that the new relationship legitimises crypto as an asset class, making this a big step in the right direction when taking a longer-term perspective.

BlackRock is huge. The firm manages just shy of $8.5 trillion worth of assets, down from the peak of over $10 trillion at the end of 2021. That’s no reflection of the business, more that asset valuations have taken a hit across the board in the first half of 2022.

So, could this revive crypto?

There was a time when ‘institutional adoption’ headlines would have sent Bitcoin soaring. The reaction was more of an indifferent shoulder shrug…

Bitcoin continues to hug the 20 day moving average, and although it has recovered from the lows posted last month, the price action hasn't been inspiring for trend traders. Perhaps the Coinbase BlackRock tie up can be a catalyst for the next move into a new price range.

The macro backdrop may play a part here too. Friday’s NFP report came in way above expectations. The US economy added 528,000 jobs in July, more than double the average expectation of 250,000. Wages (Average Hourly Earnings) also came in hotter than forecast, growing at 0.5% Month on Month.

Recent talk of a Fed pivot may yet prove premature...