The chief investment officer of global fixed income at Blackrock, the world’s largest asset manager, says bitcoin and crypto are durable assets. “I think there’s a healthy recalibration going on,” he said, noting that “if you look two or three years from now, they’ll be higher than today.”
The Blackrock Executive on Bitcoin and Crypto
Rick Rieder, chief investment officer (CIO) of global fixed income at Blackrock, shared his views on bitcoin and cryptocurrency in an interview with Yahoo Finance Live on Thursday. Blackrock is the world’s largest asset manager with approximately $10 trillion in assets under management (AUM).
Rieder was asked how the crypto market will react as the Federal Reserve begins to tighten aggressively. The Fed raised its key rate by 75 basis points this week, the biggest increase since 1994.
The IOC explained: “I think people underestimate. When you leave rates at such low levels for such a long period of time… when you keep the policy too easy, leverage builds into the system and reduces “how can I capture the yield quickly” – and you see a lot of the leverage that was built around the crypto is peeling off pretty quickly.
However, he pointed out:
I still think bitcoin and crypto are sustainable assets. It’s a sustainable business, but there was so much excess built around it.
Rieder described, “It’s not much different from the internet bubble… if you go back to 99 and 2000, was the internet a bad idea? No, it wasn’t a bad idea. But you’ve created so much hype around that and you just have to defuse that dynamic, and I think we’re seeing that today. He noted: “Markets go down five times faster than they go up…That’s why you were seeing this incredible outcome.”
While reiterating that he still believes bitcoin and crypto are sustainable assets that “will continue,” the Blackrock executive said:
I think there is a healthy recalibration going on. It’s a matter of how much this recalibration is going to go.
Asked about the prices of major cryptocurrencies, he admitted that for crypto: “It’s quite difficult when there is no real intrinsic value. So what is it worth? It’s worth what the next person will pay.
He continued: “My feeling is, in all of these situations, you go overboard, and I guess you probably have a downside from here. But it’s hard to say what fair value is. Blackrock’s Chief Investment Officer further shared:
My feeling is like a lot of assets, if you look two or three years from now they will be higher than today.
“But it could overshoot on the downside. It’s hard to understand, just like gold, because I can’t understand my free cash flow multiple and what my security is under it,” he concluded.
Rieder has made pro-bitcoin comments in the past. In November 2020, he said cryptocurrency was here to stay, noting that bitcoin could replace gold. He also said BTC is “so much more functional than smuggling a gold bar”. In September last year, he revealed that he had “a small piece of bitcoin,” noting, “I like volatile assets that have upward convexity. I could see bitcoin rising significantly.
What do you think of the comments from Blackrock’s Chief Investment Officer? Let us know in the comments section below.
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