Blackrock CIO Sees Significant Upside to Bitcoin
Blackrock’s Chief Investment Officer (CIO) of Global Fixed Income, Rick Rieder, discussed his view on bitcoin now that the cryptocurrency is legal tender in El Salvador as he made his appearance on CNBC’s Squawk Box on Friday.
With about $9.5 trillion in assets under management (AUM) at the end of the second quarter, Blackrock is the world’s largest asset manager. Rieder is responsible for roughly $2.4 trillion in assets as the firm’s head of the Fundamental Fixed Income business and head of the Global Allocation Investment Team
In his interview, Rieder commented on popular opinion that cryptocurrency is either “a hedge or an alternative (to fiat currency).” Regarding cryptocurrency as a hedge,” he said, “I’m not sure it’s a really great hedge,” as he cited its correlation to equities and risk assets.
Saying that prices can move up to 15% a day, he reiterated, “I’m not sure it’s a great hedge.”
However, on cryptocurrency as “an alternative currency,” he highlighted Bitcoin and said:
Part of why I own a small piece of bitcoin is I do think there are more people who are going to enter that fray over time … I like assets that are volatile that have upside convexity. I could see bitcoin go up significantly.
Rieder confirmed that crypto takes a “very moderate” portion of Blackrock’s portfolio. He further emphasized that Bitcoin remains volatile and said that he does not see it as a core asset like bonds or stocks. Nevertheless, he does see value in having an allocation as a speculative tool in a portfolio.
It is not unusual for Rieder to acknowledge Bitcoin’s potential. A year ago, he had said that cryptocurrency was here to stay and has the ability to replace gold. In May he had said that Bitcoin is durable and will be part of the investment arena for years to come.
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Author: Peter Siu