BlackRock reinforced the idea that Bitcoin could be the future of the financial sector, as a $9 trillion asset management firm suddenly chose Bitcoin as a hedge. The Federal Reserve dollar Crisis.
BlackRock Turns to Bitcoin for Safety
Fear about the fall of the United States Dollar (USD) they also appeared, when BlackRock, the world’s largest Bitcoin fund and asset manager, warned of a possible economic collapse from the rise of 35 billion. Lots of US debt.
BlackRock he wrote in a recent paper that growing concerns about the US government deficit and rising debt are leading many investors to explore other ways to use the US dollar. This new change applies not only to the US but also to other countries with struggling economies and high levels of debt.
Bitcoin, in this context, is seen as a safety net from a potential $35 billion crisis. As the growth of US debt has increased by trillions in recent years, BlackRock has highlighted the value of Bitcoin in this bad economic situation.
As investor concerns grow about the stability of fiat currencies, such as the dollar, many are increasingly showing interest in them. Bitcoin as a hedge against these dangers. BlackRock, for now are collected more than $10 billion in Assets Under Management (AUM), further emphasized the difference between Bitcoin and traditional “risky assets”.
The asset manager revealed that despite Bitcoin’s short-term price correlation with stocks and other risky assets, its fundamental drivers are very different from most traditional assets over the long term. To give more clarity, Bitcoin is seen as a hedge against the world’s tensions, financial volatility and currency risks.
BlackRock also said that Bitcoin is positioned as a unique investment that can provide security economic risks in a country facing increasing financial uncertainty and political instability. Its limited and non-independent capital structure has fueled global adoption, leading investors to look to it as a “flight to safety” in times of fear amid disruptive global events over the past five years.
Bitcoin Remains a Risky Asset
While underscoring Bitcoin’s potential as a safety net against the Fed’s dollar crisis, BlackRock also cautioned that it remains a conglomerate. incredibly dangerous material. The asset manager revealed that Bitcoin is an emerging technology in the financial sector early stages of global adoption.
In addition, cryptocurrency appears as very flexible and subject to a variety of risks due to regulatory challenges, immature systems and challenges in land acquisition. Although these risks may be dangerous for investors, BlackRock has pointed out that it is different from Bitcoin and is not shared by other traditional assets.
For example, Bitcoin has recently experienced challenging market conditions after trading sideways for the past few months and periods of volatility and the price goes down that brought in less than $60,000. Now the price of the cryptocurrency has increased by 4.75% in the last week and is currently trading at $63,002, according to CoinMarketCap.
Featured image from TheStreet, chart from TradingView