On the same day that the US Federal Open Market Committee (FOMC) released its June minutes, the CEO of the world’s largest asset manager appeared on TV to explain how Bitcoin could “revolutionize finance.” Do you have a sexuality?” he said.
This sentence, oddly enough, is not my typo.
Yes, BlackRock CEO Larry Fink raved about Bitcoin in an interview at Fox Business studios on July 5th. Fink is the person who said in 2017 that Bitcoin was a “monetary for money laundering.”
Fink went even further, saying that Bitcoin “is a global asset that is not based on any currency… that people can use as an alternative option” in discussions around inflation hedging and geopolitical risk hedging. rice field.
On the other hand, the FOMC minutes released on the afternoon of the 5th are interpreted as hawkish. So while job growth is solid and GDP is growing (albeit modestly), there are still too many jobs and too much inflation. Amid expectations of more restrictive monetary policy, the market did not take the minutes positively and was on a downtrend for much of the day.
what’s the big deal?
The media is flooded with news about BlackRock and its Bitcoin exchange-traded funds (ETFs), as well as competitors’ pending ETFs. It sucks, but there’s a good reason for this. This is a dramatic change in story.
Bitcoin advocates have long referred to Bitcoin as “digital gold” or “Gold 2.0.” It’s significant that one of the most authoritative figures in the financial world put it that way. Inflation hedges are treated as inflation hedges mainly because we collectively say they are inflation hedges, and the supply of assets cannot be increased or decreased artificially and at will.
But that’s not all. Here’s an interview with Fink’s CEO.
“Instead of investing in gold as a hedge against inflation, a hedge against national embarrassment, or a hedge bit against currency devaluation, just to clarify, Bitcoin is a global asset and is based on a specific currency. There is no such thing, so it can be an asset that can be used as an alternative.
this is crazy. Fink CEO has become a total Bitcoin bull.
This adds yet another story to the ‘digital gold’ story.
Bitcoin is a currency without a state. A neutral currency that can be used as a hedge against events such as currency devaluations in countries like Lebanon. Again, these are not new stories or issues. But so is BlackRock. As I said before, this is a complete shift in policy.
Naturally, we all want to know why BlackRock turned his hand. (Apart from the fact that BlackRock simply wants to make money by issuing a Bitcoin ETF) there is a simple explanation.
Customers Concerned About the Future of the Economy
BlackRock’s customers are now economically timid. Inflation ran wild and interest rates rose 20-fold. Banks have failed, and there are fears of an imminent recession.
Large clients, including insurers, pension funds, and high net worth individuals, have entered a period when the perennial equity bull market may finally come to a screeching halt as the macroeconomic environment deteriorates. I have a strong interest in protecting my money.
And when there is a debate about protecting wealth, gold is sure to be considered, given its history. Obviously so is Bitcoin. The idea that Bitcoin acts as an inflation hedge with absolute and provable scarcity has been hammered into people’s minds as a possibility by Bitcoin adherents.
The outbreak of war in Ukraine has also brought to the fore the need to protect against geopolitical risks. Neutral Bitcoin could be useful there as well. Thus, so many customers mentioned Bitcoin that BlackRock wanted to get serious about it.
Customers are always right and they seem to want Bitcoin. Can BlackRock and Fink CEOs Deny Customers? The $10 trillion asset manager probably didn’t become one because it didn’t listen to its clients.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
| Image: BlackRock CEO Larry Fink (Shutterstock)
｜Original: Thank BlackRock’s Clients for Larry Fink’s Change of Heart