The bitcoin and cryptocurrency space is attracting major companies and institutions at rates never seen before.
And now, BlackRock, the world’s largest asset manager with nearly $8.7 trillion in assets under management (AUM), has “started to dabble” in bitcoin.
BlackRock comes to the party
Rick Rieder, BlackRock’s chief investment officer of fixed income spoke to CNBC after bitcoin broke above $51,000 to register a new high
“Today the volatility of it is extraordinary, but listen, people are looking for storehouses of value,” said Rieder.
He told Squawk Box that the asset manager is venturing into the crypto space.
“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 move may not come as a complete surprise given that the asset manager has previously shown interest in bitcoin.
In a filing with the U.S. Securities and Exchange Commission (SEC) in January, BlackRock suggested that it could invest in bitcoin futures for two of its funds.
In November last year, Rieder backed the digital asset and stated that it is “here to stay.”
Bitcoin portfolio allocation
Despite rising more than 70% in value this year, Rieder said that the amount of exposure an investor has to bitcoin “depends on what the rest of your portfolio looks like.”
He highlighted that interest rates do not work as a hedge and this requires investors to look into other assets for diversification.
“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,” he explained.
Tesla recently spent $1.5 billion of its treasury in buying bitcoin while Microstrategy is borrowing $900 million to buy additional bitcoins. The Mayor of Miami Francis Suarez wants the City to hold 1% of its surplus cash in bitcoin.
Bitcoin and gold
The digital asset is generally equated to gold as a safe-haven asset. However, experts have begun to weigh in on bitcoin’s potential to overtake gold.
After Wall Street luminaries Paul Tudor Jones and Stanley Druckenmiller spoke positively about bitcoin last November, Rieder claimed that the cryptocurrency “could take the place of gold to a large extent.”