Bitcoin’s Seven Daily Red Candles

Coinbase and BlackRock strike a partnership for institutional bitcoin. S&P 500 rallies while bitcoin doesn’t follow. BoE says serious stagflation ahead.

BlackRock Demands Bitcoin

In a major announcement this morning, Coinbase is partnering with BlackRock to open up institutional financial rails with direct access to bitcoin. Despite the terrible price action, an announcement of this caliber is quite a strong sign that institutional demand for bitcoin continues to grow beneath the surface as BlackRock manages $10 trillion in assets. In a bitcoin bull market, one could speculate that this announcement would have sent bitcoin’s price soaring — similar to the announcement of Tesla’s bitcoin purchase in early 2021 which sent the market +20% in a matter of hours. 

BlackRock said the following regarding the announcement of 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.”

Although Coinbase stock is still down 61.67% for the year, with the news this morning the stock shot up an incredible 184.8% off its July low.

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In our release on July 15, we detailed the heightened volatility of bitcoin-related equities as both a benefit and detriment for bulls and bears looking to speculate or hedge. Today’s performance of COIN, which had more than a 25% intraday swing, is just another example of this. 

Bitcoin and the S&P 500

In our latest monthly report, which focused extensively on the evolving macroeconomic environment, we highlighted the strong correlation between bitcoin and equities over the course of 2020, while also referring to bitcoin as a quasi-24/7/365, inverse VIX (currently). Generally, this means that when equities are bidding, bitcoin has gotten a lift as well; and when equities are selling off (likely alongside a rise in the VIX), bitcoin would face downside pressure as well.