As fate would have it, while the The Federal Open Market Committee (FOMC) was dispensing minutes from its June assembly, Larry Fink, the CEO of the world’s largest asset management firm, BlackRock (BLK), was gushing about Bitcoin’s potential to metamorphose finance on a national television interview. This was the same voice that in 2017 deemed Bitcoin as an “index of money laundering.” The tides have surely turned as Fink further propagated Bitcoin’s strength as an international asset, not bound by a single currency.
Fink’s words came to light in the context of a discussion on inflation hedges and geopolitical risk hedges. The narrative indeed shifted dramatically as Bitcoin was brought to the forefront. Bitcoin enthusiasts haven’t shied away from labeling the cryptocurrency as “digital gold” or “gold 2.0.” To have such endorsement from an influential figure in finance immortalizes Bitcoin’s potential as an inflation hedge.
The Federal Reserve’s minutes, circulating the same afternoon, indicated a hawkish tilt, hinting at restrictive monetary policy in the near future. This news wasn’t well received by the markets, despite assertions of strong job gains and modest GDP growth.
Fink’s full quote further underlined his growing admiration for Bitcoin. According to him, instead of relying on gold as a security against currency devaluation and inflation, Bitcoin could offer a more robust alternative. It bears no allegiance to any one nation and could serve as a valuable hedge in the wake of currency depreciations, such as the case unfolding in Lebanon.
From calling it a tool for money laundering to an international asset, BlackRock’s stance on Bitcoin has indeed flip-flopped, leaving many to wonder about the motive. The answer perhaps lies with BlackRock‘s clientele. In these times of rampant inflation, increasing interest rates, and failing banks, clients seek security against a potential economic downturn. These clients, which include insurance companies, well-off individuals, and pension funds, are increasingly mentioning Bitcoin amidst these conversations.
As the equities bull market’s continuity comes into question, so does the need for protection against geopolitical risks, such as the ongoing war in Ukraine. Given its neutrality, Bitcoin could provide a potential safeguard. It appears that their clients’ interest in Bitcoin was compelling enough for BlackRock to take it more seriously. BlackRock didn’t ascend to a $10 trillion asset manager status by ignoring their clients’ needs and wants, after all.
It seems like the Bitcoin narrative is snowballing, with a growing chorus of influential voices framing the technology as an alternative asset for hedging against economic and geopolitical instability. Nonetheless, whether this vocal endorsement translates into broader institutional adoption or remains a passing comment in the ever-evolving cryptocurrency narrative, only time will tell.
Source: Coindesk
