Author: Billy Bambrough Forbes; Translated by: Liam
On September 19, Forbes reported that BlackRock recently revealed that they are quietly preparing for a $35 trillion debt crisis - a crisis that is expected to trigger a surge in Bitcoin prices.
After the Federal Reserve announced its first interest rate cut since the epidemic, the price of Bitcoin suddenly soared, and it is expected that the price of Bitcoin will "explode".
Bitcoin prices have climbed above $62,000 per coin, and traders are now turning their attention to China's financial markets after the Federal Reserve unexpectedly cut interest rates by 50 basis points, which will usher in a new round of liquidity cycle and may put Bitcoin and cryptocurrency markets on the "cusp" of major changes.
Now, as fears spread that the dollar is "on the verge of a total collapse," BlackRock, the world's largest asset manager, warned that growing concerns about the U.S.'s $35 trillion debt are expected to drive "institutional interest in Bitcoin."
“Growing concerns both inside and outside the United States about the U.S. federal deficit and debt situation have increased the appeal of potential alternative reserve assets as a potential hedge against future events that could impact the dollar,” BlackRock’s chief investment officer for ETFs and head of global macro for crypto and fixed income wrote in a paper outlining the investment case for Bitcoin.
“This is why some are calling Bitcoin the Second Amendment of money,” Bloomberg ETF analyst Eric Balchunas wrote on X, adding that total U.S. debt is $35 trillion and growing at a rate of $1 trillion every 100 days with “no end in sight.”
“This dynamic also appears to be playing out in other countries where debt has accumulated significantly,” the BlackRock paper’s authors added. “Based on our experience with clients to date, this explains the recent increase in institutional interest in Bitcoin.”
BlackRock, which manages about $10 trillion in assets, describes Bitcoin as a "unique diversification tool" that can be used to hedge against economic and political risks.
The report concludes: While Bitcoin has short-term co-movements with stocks and other risk assets, over the long term its fundamental drivers are radically different and in many cases opposite to those of most traditional investment assets.
In July this year, BlackRock CEO Larry Fink said that he had previously dismissed Bitcoin as a "tool for money laundering", but now admitted that he was "wrong" and acknowledged that Bitcoin is "digital gold" and a "legal" financial instrument.
Last year, BlackRock successfully brought a full-fledged U.S. Bitcoin spot exchange-traded fund (ETF) to market, which was one of the main drivers of Bitcoin's price increase in 2024 as Wall Street flocked to the Bitcoin market.
Bitcoin prices have surged this year, driven by the Fed's dovish shift and BlackRock
In May this year, BlackRock's iShares Bitcoin Trust (IBIT) replaced Grayscale Bitcoin Trust (GBTC) as the world's largest Bitcoin exchange-traded investment fund, and IBIT's inflows recently exceeded US$21 billion.
Many Bitcoin and cryptocurrency observers expect the Bitcoin price rebound following the Federal Reserve’s historic 50 basis point rate cut to herald the start of a new Bitcoin bull run.
“While there are other macro factors weighing on Bitcoin and other risk assets right now, including geopolitical tensions and election uncertainty, these markets should benefit from the formalization of a dovish shift by the Fed,” Samir Kerbage, chief investment officer at bitcoin and cryptocurrency investment firm Hashdex, said in emailed comments.
“Our long-term investment view on Bitcoin remains unchanged, and regardless of the short-term direction of monetary policy, Bitcoin’s growth prospects remain favorable as institutional adoption continues to gain momentum.”
