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- The price of bitcoin is caught in a rut, having dropped from the $50,000 mark seen last weekend
- He cited bitcoin’s dramatic price swings, adding that it’s extremely hard to hedge enormous, organic asset pools with that as a hedge when an asset changes 10-15 percent in a day, as the top cryptocurrency has been known to do
- He does not consider a volatile asset like bitcoin to be a core asset in the same way that shares or bonds are, although he does remark, he believes there is some benefit in having a little like a more speculative instrument in a portfolio
The price of bitcoin is caught in a rut, having dropped from the $50,000 mark seen last weekend. Bitcoin is quickly finding its way into the investing discourse as a store-of-value asset that competes with gold in this uncertain global economic climate. Because of its scarcity and non-sovereign character, Bitcoin has earned a reputation as a hedge against rising consumer costs. Rick Rieder, BlackRock’s CIO of global fixed income, has a different perspective. Rieder told CNBC that he isn’t persuaded that bitcoin is a good inflation hedge, citing the cryptocurrency’s ties to equities and risk assets. Both markets have been dominated by bulls, with the S&P 500 up 21% so far this year compared to bitcoin’s 50%+ gains.
He cited bitcoin’s dramatic price swings, adding that it’s extremely hard to hedge enormous, organic asset pools with that as a hedge when an asset changes 10-15 percent in a day, as the top cryptocurrency has been known to do. Rieder feels that increased bitcoin acceptance is on the horizon and that more individuals are going to enter that fight over time, despite the fact that BlackRock holds a little portion of bitcoin. In its portfolio, BlackRock has a modest stake. The global fixed income CIO at BlackRock is also a lover of volatile assets with upside convexity. Bitcoin, according to BlackRock’s Rieder, will likely move up considerably, as it has in the past.
He does not consider a volatile asset like bitcoin to be a core asset in the same way that shares or bonds are, although he does remark, he believes there is some benefit in having a little like a more speculative instrument in a portfolio. Rieder of BlackRock isn’t alone in believing that bitcoin isn’t the greatest hedge. Gold, according to billionaire investor Leon Cooperman, is the go-to asset in difficult times, and investors seeking a safe haven should flock to the precious metal. Cooperman, who operates Omega Advisors, said he doesn’t comprehend bitcoin and thus avoids it. He urges investors to do the same, particularly if they are elderly and perplexed.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
