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 to three years hence, they will 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 is going to react as the Federal Reserve begins tightening aggressively. The Fed hiked its benchmark rate by 75 basis points this week — the largest 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 emphasized:
I still think bitcoin and crypto are durable assets. It’s a durable 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 thinks bitcoin and crypto are durable assets that are “going to go on,” the Blackrock executive opined:
I think there is a healthy recalibration going on. It’s a matter of how much this recalibration is going to go.
When asked about the prices of major cryptocurrencies, he admitted that for crypto: “It’s pretty hard when there is no true 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 sense is like a lot of assets, if you look two to three years hence, 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 some pro-bitcoin comments in the past. In November 2020, he said cryptocurrency is here to stay, noting that bitcoin could replace gold. He also said BTC is “so much more functional than passing a bar of gold around.” In September last year, he revealed that he owns “a small piece of bitcoin,” emphasizing: “I like assets that are volatile that have upside convexity. I could see bitcoin go up significantly.”
