Alibaba, Amazon, Ebay, or Apple, who’s next regarding placing excess earnings into cryptocurrency? The wave of major corporations has started and it’s only the beginning.
The world’s largest cryptocurrency has been on an unprecedented rally since Tesla‘s announcement of $1.5 billion worth of BTC purchase. Another major investment group came this week when the world’s largest asset manager BlackRock announces its Bitcoin investment.
Rick Rieder, BlackRock’s chief investment officer of global fixed income, told CNBC on Wednesday, February 17. During an interview with CNBC’s Squawk Box, Rieder said:
“Today the volatility of it is extraordinary, but listen, people are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building, so we’ve started to dabble a bit into it.”
The entry of financial giants like BlackRock certainly puts a lot of weight on more institutional players to participate. Last month in January 2021, BlackRock added BTC Futures as potential investment for two of its funds. This included the BlackRock Global Allocation Fund and the BlackRock Strategic Income Opportunities Fund.
Big picture $BTC
Bitcoin is undergoing its third parabolic advance in the past decade. A parabolic advance on an arithmetic scale is extremely rare – three on a log scale is historic pic.twitter.com/fyyM5Ws6N5— Peter Brandt (@PeterLBrandt) February 16, 2021
With a day of crossing the $50,000 milestone, Bitcoin (BTC) has surged another 5.5% hitting its new all-time high above $52, 400 levels. The BTC price has already jumped 70% year-to-date and entering at such a stage means the big players are looking at solid potential ahead.
Commenting on the regulatory developments taking in the space, Rieder said:
“My sense is the technology has evolved and the regulation has evolved to the point where a number of people find it should be part of the portfolio, so that’s what’s driving the price up”.
Extra Earnings into Bitcoin
In the interview further, Rieder added that BlackRock is holding a lot more cash than ever before in its history. With inflation ahead along with solid currency devaluation, sitting on a hoard of cash just doesn’t make sense.
Rieder said:
“It’s because duration doesn’t work, interest rates don’t work as a hedge and so diversifying into other assets makes some sense. Holding some portion of what you hold in cash in things like crypto seems to make some sense to me, but I wouldn’t espouse a certain allocation or target holding.”
When asked how much one should allocate to Bitcoin, Rieder added
“it depends on what the rest of your portfolio looks like”.
As Bitcoin crossed $50K levels, the institutional interest in BTC has also surged to new highs. On Tuesday, February 16, the CME Bitcoin Futures trading volume skyrocketed to a record $5 billion. SkyBridge Capital founder Anthony Scaramucci expects the BTC price to hit $100K before 2021-end.
