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Blackrock flip-flops on Bitcoin

Photo of: Joseph Stone
by Joseph Stone

Is Blackrock about to question its future investment in Bitcoin? The giant’s CEO, Larry Fink, believes that BTC is characterized by high volatility and remains too small a market.

Blackrock, a financial giant, has recently been praising Bitcoin. Rick Rieder, its Chief Investment Officer, went so far as to suggest that the asset had the potential to replace gold.

More importantly, the company decided to allow its managers to incorporate Bitcoin and other cryptocurrencies into their portfolios. Nevertheless, its CEO is a priori more hesitant about the crypto-active.

In an interview with Bloomberg, Larry Fink points in particular to the high volatility of the BTC. But this is not his only weakness, however. He also emphasizes the very small size of this market at the moment.

These remarks, however, do not necessarily amount to a disavowal. The boss can legitimately consider Bitcoin to be “such a small asset class compared to other asset classes. »

Fink’s statements are, above all, balanced and balanced against the perhaps overly glowing words of other financial players. Thus, Bitcoin “could be another source of wealth,” he does not rule out.

But at the same time, he reminds us that this characteristic remains to be demonstrated. According to him, “it has not yet been tested”. As for volatility, it therefore stems from the small size of the market. As a result, Bitcoin “is very volatile, evolving in steps of 5 to 6% with small dollar investments that make it move. »

No euphoria from Larry Fink. Blackrock’s boss is waiting for evidence to rule. “Its long-term viability has not yet been proven,” he says at this stage. And his interest is primarily focused on the potential of cryptocurrencies.

“A certain form of digital currency will play a more significant role in the future. And it may well be Bitcoin,” says the finance executive. However, he adds, this digital currency could also take another form than Bitcoin.

As for Blackrock’s exposure to the BTC, it remains indirect for the time being. The fund holds shares in MicroStrategy, a publisher whose capital in Bitcoin now exceeds $2 billion.

In addition, documents filed with the SEC highlight that two Blackrock funds are considering investing in Bitcoin derivatives and other crypto-assets. These potential investments have yet to materialize, however.