We need to bring back hope, Larry Fink, the CEO and founder of one of the biggest asset manager in the world, BlackRock, said in an interview on Wednesday.
“ETF was a big revolution from the mutual funds industry and it’s really taking over the mutual funds industry. We do believe that if we can create more tokenization of assets and securities, and that’s what bitcoin is, it can revolutionize again finance,” Fink said.
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By bitcoin here presumably he means the crypto industry more widely, although the launch of the Ordinals protocol can allow for tokenization on bitcoin as well, but it’s ethereum that usually dominates that area, with tokenization being just one aspect.
“The role of crypto is digitizing gold,” Fink said. “Instead of investing in gold as a hedge against inflation, a hedge against the onerous problems of any one country, or the devaluation of your currency in whatever country you’re in…
Let’s be clear, bitcoin is an international asset. It’s not based on any one currency, and so it can represent an asset that people can play as an alternative.”
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Bitcoin does not quite correlate with gold however. Making it quite a bit more than just an alternative because you can actually use bitcoin to pay for things, in ethereum you can invest in defi for yield, and tokenization can also be a business model for startups.
“It’s an advancement of technology,” Fink said. “We don’t need custodians anymore. The whole process of finance, some of the intermediaries are broken down.”
Wall Street, The New Crypto Bros?
Well, that’s quite an endorsement from the man that oversees $9 trillion in assets. That’s more than the GDP of Germany and the United Kingdom combined. It’s not far off from half the GDP of the United States and about twice its tax intake. It’s more than 4 times the GDP of capricious Russia, and nine times that of Turkey, a country of 70 million people.
Although that $9 trillion is not his, people have given it to him to hold it and invest it on trust, it’s still a massive success for a company that barely existed 30 years ago.
In that timeframe they have filed for 576 ETFs, only one got rejected because it was a non-transparent ETF which SEC does not allow.
The timing of the bitcoin spot ETF filing however, just as the crypto industry was digesting SEC’s decision to sue Coinbase and Binance for not registering with SEC as securities exchanges, is telling because in a way we take this as a constituency speaking, not just BlackRock.
Fink himself used to be a crypto sceptic and that’s very common because even some bitcoin core developers started off as crypto sceptic, yet there were some in finance that always liked bitcoin and that portion we think has grown to a majority.
There are still the holdouts, or the laggards, with Jamie Dimon of JP Morgan being the chief example, but there has been a sea change in Wall Street, and this Fink interview is the final proof of it.
While previously it was not too easy to understand this crypto thing, Fink’s comments show now they do, and not just that, but they like it.
So the young bankers as we metaphorically call them, because Fink himself is not young but BlackRock is, have stood up to say to the old bankers like Gary Gensler that this is cool.
And so the ETF itself and whatever happens to it, although the court will decide if SEC doesn’t, is less informative than the confirmation in effect that cryptos are now accepted at least among some huge asset managers as the cool new toy in Wall Street.
Then there’s the other timing as well. Bitcoin is at the lower end of price ranges but more importantly Fink said he expects inflation to be more sticky.
He said a trillion dollars in stimulus money for infrastructure investments is coming, and only 5% of it has been spent in his estimate.
That’s for renovating airports, but also solar panels, chips, a whole harnessing the new technology revolution deal.
If inflation persists, then bitcoin becomes a very appealing asset because it benefits from growth, and Fink implied there will be some due to the stimulus, but also because one bitcoin is one bitcoin while one dollar in circulating supply is changing as inflation attests.
On the other hand, commercial real estate is on the doldrums and that may affect some banks. While China is turning on the printer as their economy comes under stress.
BlackRock therefore is basically saying now it’s a good time to buy bitcoin, and it’s difficult to see many analysts disagreeing.
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