Blackrock is experimenting with bitcoin futures after allowing two funds to add the popular cryptocurrency as an eligible investment.

The world’s largest asset manager is to offer clients exposure to the cryptocurrency as Wall Street responds to growing interest from investors.

However, the value of bitcoin fell by 10 per cent yesterday to $31,412.34, providing another example of the volatility in its trading that has so alarmed policymakers and leading bankers.

Just over three years ago Larry Fink, Blackrock’s founder, chairman and chief executive, described bitcoin as an “index of money laundering” and Jamie Dimon, chairman and chief executive of JP Morgan Chase, said that investing in the digital asset was “stupid”.

Last month Mr Fink, 68, appeared to have had a change of heart, describing bitcoin as “something that’s real” that could evolve into a “global market”. While Mr Dimon, 64, maintains that the cryptocurrency is not his “cup of tea,” he has observed that some “very smart people” are investing.

In a filing with the US Securities and Exchange Commission this week, Blackrock disclosed that two of its funds — Blackrock Strategic Income Opportunities and Blackrock Global Allocation Fund — would invest only in cash-settled bitcoin futures.

The cryptocurrency exists as strings of computer code, with no physical form. It was developed by a secretive software developer using the name of Satoshi Nakamoto. While intended to be used as an alternative currency to pay for goods and services, its main use has been speculative trading.

Its value almost quadrupled last year, chased higher by large numbers of retail investors entranced by its extraordinary momentum and institutional investors seeking a potential hedge against inflation.

In a note to clients, analysts at JP Morgan cautioned that bitcoin was the “least reliable hedge during periods of acute market stress” .

This week Janet Yellen, President Biden’s nominee for US treasury secretary, raised the prospect of a clampdown on cryptocurrencies. The former Federal Reserve chairwoman described them as a “particular concern” during her confirmation hearing. “Many are used, at least in a transactions sense, mainly for illicit financing,” she said.

Source: The Times