While an approved BlackRock spot Bitcoin (BTC) exchange-traded fund (ETF) will funnel new institutional money to Bitcoin, it’s going to be the retail investors that ultimately drive any significant price surges, according to Michael Shaulov, the CEO and co-founder of institutional custody platform Fireblocks.
On June 15, investment colossus BlackRock filed for a spot Bitcoin ETF, leading to other financial firms filing their own, along with Bitcoin’s price reaching its highest levels in a year.
However, while many are hopeful that institutional involvement in crypto will further rocket prices, Shaulov notes that may not necessarily happen.
“When institutions come in to participate in the market and they’re doing it in a quiet way, they’re able to do it almost without moving the price,” Shaulov told Cointelegraph during the Australian Blockchain Week.
According to Shaulov, mid-2020 was another time that saw “massive inflows” of institutional money, but prices didn’t really appreciate until retail investors frenzied over crypto assets later in the year.
“Even though there were massive inflows, those institutions were sophisticated enough to acquire [BTC] slowly and use algorithms that won’t drive up the market.”
Instead, “50% increases [came] from retail […] because they’re participating in a way that’s less sophisticated and moves the price dramatically,” he explained.
That being said, Shaulov noted that the “physics of Bitcoin” — mainly its finite supply — means that any mass buy-up of Bitcoin should end up moving the needle.
“It’ll definitely be easier for some institutions that are currently not participating in the market to add Bitcoin to their allocation.”
Interestingly, Shaulov — who founded Fireblocks in 2018, believes that the narrative over Bitcoin is still “playing out” for these institutions.
Shaulov said that today, there are numerous Bitcoin-based narratives still at play: Is it a hedge against inflation? Is it a public reserve currency? Is that a hedge against government financial misdealings?
You work for it.
They just print it and laugh about it.
— Daniel Prince (@PrinceySOV) June 26, 2023
Shaulov said that personally, he believes Bitcoin is the “ultimate insurance asset.”
“It has all it has the properties [of something] for when everything gets worse. It is an asset that is disconnected from the government. It’s an asset that can be digitally native, it’s an asset that can be moved easily.”
“It doesn’t matter if at one point it’s worth $15,000, $20,000 or $60,000. You just need to have enough of it in that variance, in order to survive a period,” he said.