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 has been a healthy recalibration.” He noted, “If you look two to three years from now, they will be higher than they are today.”
BlackRock Executives Talk Bitcoin and Crypto
Rick Reeder, BlackRock’s chief investment officer for global fixed income, shared his views on bitcoin and cryptocurrencies 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 markets will react when the Federal Reserve begins aggressive tightening; the Fed raised its benchmark rate by 75 basis points this week, the largest increase since 1994.
The CIO explained. ‘I think people are underestimating. When you leave it at such a low level for an extended period of time … When you keep policies too easy, leverage builds up in the system slash ‘how I capture returns quickly’ – and you’re seeing a lot of leverage built around crypto come pretty darnot quickly.”
But he stressed.
I still think bitcoin and crypto are durable assets. It is a durable business, but there was so much excess built up around it.
Rieder explained. “It’s very similar to the Internet bubble … . if you go back to ’99 and 2000, was the Internet a bad idea? No, it was not a bad idea. But it created an excess around it, and we have to break out of that dynamic. He puts it this way.
“Markets go down five times faster than they go up.
The BlackRock executive opined, while reiterating that he still believes that bitcoin and crypto are durable assets that “are going to continue.”
I think there is a healthy recalibration going on. The question is how much further that readjustment will go.
When asked about the price of major cryptocurrencies, he acknowledged that for crypto.” When there is no true intrinsic value, it is quite difficult to find. So what is it worth? It is worth what the next person pays.”
He continued. “My sense is that in this situation you overshoot and my guess is that you probably have some downside to go from here. But it’s hard to say what fair value is.” BlackRock’s chief investment officer further stated.
My sense is that, like many assets, if you look two or three years from now, it will be higher than it is today.
“But on the downside, it could overshoot. This is like gold, it’s hard to know what your free cash flow multiple is and what your security is underneath it,” he concluded.
Rieder has commented in favor of bitcoin in the past; in November 2020, he said cryptocurrencies are here to stay and noted that bitcoin could replace gold. He also saidthat BTCis “much more functional than passing gold bars.” Last September, he revealed that he owned “a small amount of bitcoin,” stressing, “I like volatile assets with a convexity on top. I can see bitcoin going up a lot.”
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