Key Takeaways:
- Rick Rieder says bitcoin’s price could rise significantly
- The BlackRock CIO says he owns a “small piece” of bitcoin
Rick Rieder has Invested in Bitcoin and Sees Further Growth
BlackRock Chief Investment Officer Rick Rieder said he owns a “small piece” of bitcoin. Also, he said believes that its price “could go up significantly”.
Speaking to CNBC, BlackRock CIO Rick Rieder described bitcoin as an alternative currency. A currency that’s volatile but with significant upside potential due to the stage of development it’s currently in.
“Part of why I own a small piece of Bitcoin is I do think there are more people who are going to enter that fray over time … I like assets that are volatile that have upside convexity. I could see bitcoin go up significantly but I think it’s volatile”.
Bitcoin as a Hedge Against Inflation
In the interview, Mr. Rieder also discussed the hedge-against-inflation narrative that surrounds bitcoin’s price movement.
“When an asset [like bitcoin] moves 10% to 15% a day, it’s really hard to hedge big organic asset pools with that as a hedge.”
A hedge against inflation, or inflation hedge, would typically describe an instrument owned to protect a portfolio against a decrease in the purchasing power of money.
Bitcoin has often been described as an inflation hedge, or protection against rising prices. As a result of its limited supply of 21 million coins. By having a hard cap on its supply, bitcoin cannot be devalued by an authority that could distribute too much of it.
In contrast, central banks like the US Federal Reserve, could issue an infinite amount of US dollars, thus bringing down their value, or purchasing power, in the process.
BlackRock, the world’s biggest asset manager, had already been involved with bitcoin on an institutional level. Near the end of March, the investment firm managing about $9.5tn, revealed it had purchased bitcoin futures for $6.5 million.
Following the profitable foray, BlackRock CEO Larry Fink said bitcoin could become a “great asset class”. In signs of continued interest in bitcoin, a couple of weeks ago, BlackRock bought $383 million worth of shares in companies that mine the original cryptocurrency.