2021-2-18 02:00 |
Speaking on CNBC Squawkbox, BlackRock’s chief investment officer Rick Rieder admits the firm dabbles with Bitcoin.
BlackRock is the world’s largest asset manager with approximately $8 trillion in assets under management. The firm is publically listed with a market cap of around $110 billion.
BlackRock CIO offers guarded response to Bitcoin positionHost Joe Kernen began by quizzing Rieder on his position regarding the leading cryptocurrency. Rieder’s response was cagey as he tried hard to maintain a neutral position.
“I think crypto generally has got in the imagination of a lot of people. Today, the volatility of it is extraordinary. But listen, people are looking for storehouses of value. People are looking for places that could appreciate, under the assumption that inflation moves higher and that’s your building.”
All the same, Rieder admitted that BlackRock had started to “dabble in” Bitcoin. However, he refused to detail the sums involved.
Instead, he mentioned a confluence of changing factors had triggered a change in policy towards Bitcoin. This includes his own grasp on technology and an increasingly favorable regulatory landscape.
“My sense of technology has evolved, and the regulations have evolved, to the point where a number of people find it should be part of the portfolio. And so, that’s what’s driving the price up.”
When pressed on future developments, Rieder implied that difficult macroeconomic conditions had pushed BlackRock towards Bitcoin. The insinuation here is that further deterioration will activate greater buy pressure in Bitcoin markets.
“we’re holding a lot more cash than we’ve held historically because duration doesn’t work, interest rates doesn’t work as a hedge. And so, diversifying into other assets makes some sense.”
BlackRock signals escalating interest in cryptocurrencyLast month, it emerged that Bitcoin derivatives on commodity exchanges will become eligible investments for both the BlackRock Funds V and Blackrock Global Allocation Fund.
The move is in line with an increasingly positive Bitcoin rhetoric coming from BlackRock. Its CEO Larry Fink spoke about the possibility of Bitcoin going global. He added that having a digital currency makes the U.S. dollar less relevant.
As Rieder touched on, deteriorating macroeconomic conditions in negative rates, extreme monetary policy, and rocketing public debt have institutions looking at crypto to diversify.
Recent weeks have seen a flood of high-profile institutional investors come forward, including Tesla and BNY Mellon. Not forgetting hints of interest from the likes of JPMorgan.
This momentum of institutional buyers will only encourage more companies to do the same, or risk exposure in these uncertain times.
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