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- BlackRock predicts a crisis as the US debt spirals and the Fed cuts rates for the first time since the 2020 COVID pandemic.
- The company says Bitcoin is a “unique diversified” in a recent paper, saying that it could offer the best alternative investment amid global political tensions.
It was a historic week as the US Federal Reserve cut interest rates for the first time since the 2020 COVID-19 pandemic., ending its longest streak of rate hikes in a decade. While some say the move will improve the country’s well-being, BlackRock revealed that it anticipates a crisis as the US debt spirals, and Bitcoin could be the safest haven.
BlackRock revealed in a recent paper to investors that the rising debt is creating “growing concerns” with investors.
BlackRock just put out a nine-page white paper that makes case for bitcoin ETF as a "unique diversifier" that can hedge against fiscal, monetary and geopolitical risks, also incl section called "Bitcoin's path to $1 trillion market cap" 👀 Read whole thing here:… pic.twitter.com/mRzDpw4aSP
— Eric Balchunas (@EricBalchunas) September 18, 2024
The paper, titled “Bitcoin: A Unique Diversifier” and authored by Chief Investment Officer of ETF Samara Cohen and two of her colleagues, proposed Bitcoin as one of the most viable alternative investments.
BlackRock stated:
The growing concerns in the U.S. and abroad over the state of U.S. federal deficits and debt has increased the appeal of potential alternative reserve assets as a potential hedge against possible future events affecting the U.S. dollar.
With the entry of the likes of BlackRock and Fidelity into the Bitcoin sector through their spot ETFs, the top token has become more intertwined with traditional finance. This has resulted in questions on whether the crypto is still a ‘risk-off’ asset and a viable hedge against the other assets.
BlackRock laid these concerns to rest, noting:
…Bitcoin’s long-term correlation to equities and bonds has been low and its long-term historical returns have been vastly higher than all major asset classes. Over extended time horizons, we believe Bitcoin’s adoption drivers are likely to be district from, and in some cases inverted with, the global macro factors that drive most traditional financial assets.
BlackRock: Bitcoin is a Unique Diversifier
BlackRock is the world’s largest asset manager, with its $10 trillion under management higher than the GDPs of all but two countries globally—the US and China. This makes it the most authoritative voice in the financial world, and the importance of its backing of Bitcoin can’t be overstated.
It hasn’t always been this way. CEO Larry Fink has called BTC an index of money laundering in the past before changing his mind and calling it digital gold this year.
And now, the company is pushing Bitcoin as the best diversified at an uncertain time for the US economy. The report stated:
As the global investment community grapples with rising geopolitical tensions, concerns over the state of US debts and deficits, and increased political instability around the world, Bitcoin may be seen as an increasingly unique diversified asset against some of these fiscal, monetary and geopolitical risk factors investors may face elsewhere in their portfolios.
BTC has bounced back in the past three days, trading at $63,500 at press time after gaining 10% since Tuesday. This momentum has inspired the rest of the market, with the overall market cap surging 6.3% in the past day to hit $2.18 trillion.
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