BlackRock CEO Larry Fink is a ‘Major Believer’ in Bitcoin, Admits his Change of Heart
Fink turned from skeptic to believer, compares Bitcoin to gold. | Credit: John Lamparski/Getty Images
Key Takeaways
- Increased market maturity, clearer regulations, and advanced trading solutions have made Bitcoin more attractive to institutions, fueling its growth.
- Larry Fink, once a skeptic, now sees Bitcoin as a “digital gold” and supports its inclusion in portfolios.
- BlackRock’s iShares Bitcoin Trust, the largest Bitcoin ETF, boasts $18 billion in assets.
- Significant inflows into Bitcoin ETFs are providing steady demand that counters price volatility.
Institutional interest in Bitcoin has grown significantly, with increased market maturity, regulatory clarity, and advanced trading solutions enhancing its investment appeal. Additionally, wider adoption by major companies and blockchain integration across industries have bolstered confidence in its long-term value.
One of those institutions is BlackRock, whose CEO, Larry Fink, revealed that his earlier skepticism towards cryptocurrencies has changed after investing time in understanding Bitcoin. He now supports the inclusion of crypto in investors’ portfolios, acknowledging its potential after overcoming his initial doubts.
BlackRock Boss Flips: Bitcoin Now “Digital Gold” Worthy of Investment
In a recent CNBC interview , BlackRock CEO Larry Fink admitted that despite being an early Bitcoin skeptic, he has a new-found appreciation for its value. Fink described Bitcoin as “digital gold” and now sees its potential as a worthwhile inclusion in investment portfolios.
He said :
“I believe Bitcoin is legitimate. I’m not saying there aren’t minuses like everything else, but it is a legitimate financial instrument that allows you to have uncorrelated returns.”
Fink also described the assets as viable for the average investor’s portfolio. His change of heart came after dedicating time to understand Bitcoin better, leading him to view it as a hedge against fiscal issues like the US budget deficit and currency debasement by countries.
BlackRock’s CEO went on to discuss the firm’s increasing involvement in the cryptocurrency industry by highlighting the success of BlackRock’s iShares Bitcoin Trust (IBIT), which has amassed over $18 billion since its launch, marking it as the largest Bitcoin ETF.
Additionally, he mentioned BlackRock was exploring the potential launch of an Ether ETF. Fink cited political risk and rising government debt as compelling reasons for investing in Bitcoin, describing it as a legitimate financial instrument for non-correlated returns, especially useful in scenarios where there is fear of currency debasement by governments.
He asserted :
“I’m not trying to say there’s no misuses, like everything else, but it is a legitimate financial instrument that allows you to have non-correlated type of returns. I believe it is an instrument that you invest in when you’re more frightened, though. It is an instrument for when you believe countries are debasing their currencies by excess deficits, and some countries are.”
Fink also expressed concerns about Bitcoin’s volatility and its occasional correlation with risk-on assets like the Nasdaq, which contrasts with its proposed role as a hedge against inflation and government instability. Despite these challenges, he emphasized the critical issue of rising public spending, which he views as one of the biggest global economic concerns, suggesting that such conditions could bolster the case for investing in cryptocurrencies.
From Money Laundering Index to Digital Gold: Fink’s Bitcoin Evolution
In 2017, Larry Fink criticized Bitcoin during an Institute of International Finance meeting, labeling it as an “index of money laundering.” Fink asserted:
“Bitcoin just shows you how much demand for money laundering there is in the world. That’s all it is.”
At that time, Bitcoin had been experiencing significant growth, reaching a record high of over $5,800 on the same day and having increased by 470 percent within the year.
However, in 2022, amidst the backdrop of the Russia-Ukraine conflict, Fink signaled a notable shift in his perspective on cryptocurrencies. In a letter to shareholders, he mentioned that BlackRock was delving into digital currencies, stablecoins, and their foundational technologies to better serve clients.
Fink credited the change to the geopolitical upheavals triggered by the conflict, which prompted a global reevaluation of currency dependencies due to the impactful Western sanctions on Russia.
Moreover, he advocated for a global digital payment system that, if thoughtfully designed, could enhance international transaction settlements while mitigating risks associated with money laundering and corruption. He also noted the US Federal Reserve’s study exploring the implications of a digital dollar, highlighting the potential for digital currencies to reduce the costs of cross-border payments.
BlackRock’s iShares Bitcoin Trust Reigns Supreme with $18B in Assets
The Bitcoin ETF market has seen a resurgence of activity, with significant inflows following a dip in Bitcoin prices—the lowest since February. Over the past week, $882 million poured into Bitcoin ETFs , with BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s funds attracting the most, contributing $403 million and $361 million, respectively. These inflows are the largest since May 23.
Currently, IBIT, holding about 316,276.2 BTC , is the leading fund with around $18 billion in net assets, making it $3 billion larger than its closest competitor, GBTC. At the time of writing, BlackRock remained the world’s largest ETF manager by assets under management (AUM), overseeing $3.5 trillion in global ETF investments as of the end of 2023.
BlackRock Flips Grayscale, Overtakes GBTC as 421 firms Disclose IBIT Holdings
