The cryptocurrency market has been in turmoil for the better part of this month, and institutional investors have not been spared, given that some leading firms in the space, such as Babel Finance, Celsius Network, and Three Arrows Capital, are facing liquidity shortages. However, despite the ongoing FUD, the Chief Investment Officer of global fixed income at BlackRock, Rick Rieder, has elicited a bullish sentiment regarding the space after saying that he believes that Bitcoin and cryptocurrencies are durable assets.
BlackRock CIO says crypto is a durable asset
Rieder shared his sentiments about the crypto sector during an interview with Yahoo Finance on Thursday. The executive addressed the recent interest rate hike by the Federal Reserve and the impact this would have on crypto. The Fed increased the rate by 75 basis points to curb the rising inflation.
Rieder opined that when these interest rates are left at low levels for a large period or when policies are eased, it builds up a lot of leverage. “And you are seeing a lot of the leverage that was built up around crypto come unglued pretty darn quickly.”
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However, despite all this, Rieder affirmed that “Bitcoin and crypto are durable assets.” He added that crypto was going through the same cycle as the internet did in the late 90s. At the time, a lot of excess was built around the concept of the internet, which is what is currently happening in crypto.
Some of the best cryptos in the market have gained utility as a means of payment or in projects such as decentralized finance (DeFi). However, according to Rieder, analyzing crypto prices was “pretty hard” because they lacked intrinsic value.
“My sense is, in all these situations, you overshoot, and my guess is you have probably got some downside to go from here. But it’s hard to say what fair value is,” the executive added. He also opined that crypto prices had similar price dynamics to gold.
BlackRock’s CIO is a long-term Bitcoin supporter
This is not the first time Rieder has made positive remarks about Bitcoin. In November 2020, Rieder said that cryptocurrencies were here to stay, adding that Bitcoin had the potential to replace gold.
At the time, Rieder also said that Bitcoin was “so much more functional than passing a bar of gold around.” He also shared similar sentiments in September 2021, admitting that he owned Bitcoin.
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