Bitcoin Price Could Rise Dramatically
Rick Rieder, managing director of BlackRock, Inc., said in an interview with CNBC’s “Squawk Box” Thursday that he could see the price of Bitcoin (BTC) “rise dramatically.” That’s a welcome word for bitcoin traders this week, with the price coming down to $ 45,000.
In no way does Mr. Rieder, the CIO of the world’s largest asset management company (with $ 9 trillion in assets under management), make an all-out Bitcoin bull.
He warned that the price of bitcoin is very volatile and questioned the alternative assets thesis that bitcoin is a good hedge.
Why the BlackRock CIO is long BTC
During the Squawk Box segment, Rieder said:
“First off, I’ll say about crypto-people describe it as a hedge or an alternative. I’m not sure it’s a very good hedge. I mean the correlation to equities, the correlation to risky assets. I’m not sure it’s a good hedge.
“By the way, when an asset is moving ten to fifteen percent a day, it’s really hard to cover large pools of organic assets with that as a cover.”
But Rieder is still bullish on Bitcoin and explained to viewers why he maintains a moderate long position in Bitcoin in his portfolio:
“Look, I said… one of the reasons I own a little bit of bitcoin is that I think there are more people going to get into this fray over time. We have a very moderate position in our portfolio. I frankly like assets that are volatile, that have upward convexity, and I could see bitcoin the way it is. I could see it increasing significantly.
Rieder also clarified that he does not believe Bitcoin to be a “core asset” like fixed income (bonds) or stocks (stocks). He just thinks that digital currency is still at the start of its market adoption curve, appreciates the rise in the price of Bitcoin, and sees volatility as a plus for his needs.
Last month, BlackRock invested US $ 383 million in two bitcoin mining companies through its mutual funds and exchange traded funds to support its clients’ bitcoin exposure.
Considering the rise in the price of bitcoin, Rieder would likely wish BlackRock had made that decision last November when he predicted that bitcoin would largely replace gold.
Hard week for the price of Bitcoin
It’s been a tough week for bitcoin traders, with the 5-day Bitcoin price down more than 11%, briefly dipping below $ 45,000 in liquid forex markets on Friday.
As it turned out, this week’s “Bitcoin Day”, the day cryptocurrency was adopted as legal tender in El Salvador, saw the biggest bitcoin price capitulation since the rout after record highs in May. . The worst day of the coin in four months saw some US $ 330 billion wiped out of its total market cap in less than 24 hours.
Image courtesy of CNBC
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