In 2023, the announcement by BlackRock, the world’s largest asset manager, to launch a Bitcoin spot ETF surprised financial markets. The move marked a major reversal from its previous stance on Bitcoin. The move sparked many questions: Why did Larry Fink and BlackRock change their minds so abruptly? What do they know that others don’t?
With over $10 trillion under management, BlackRock is one of the most influential firms in global finance. Its size and power mean it often has insights that others don’t yet have. BlackRock CEO Larry Fink, once a Bitcoin skeptic, is now a vocal advocate. This sea change should capture the attention of any investor, as BlackRock is a powerhouse in the asset management space.
Before this announcement, 2023 had been a rough year for cryptocurrencies, due to the bankruptcy of FTX and strict regulations in the United States. The Biden administration, led by figures like Elizabeth Warren and Gary Gensler, head of the SEC, imposed heavy restrictions on the crypto industry. In this tense climate, BlackRock’s announcement suddenly gave Bitcoin a positive boost, influencing the entire trajectory of the crypto market.
Why this change of direction?
It seems that BlackRock is seeing economic dynamics that many are refusing to see. The U.S. dollar is showing signs of weakness, and the U.S. economy is going through a period of high inflation and runaway debt, which now stands at over $35 trillion. Historically, the U.S. has been able to get by by printing more dollars, benefiting from its status as the world’s reserve currency. But with rising debt and rising inflation, this strategy is reaching its limits. In fact, several countries are starting to turn away from the dollar.
Today, saving in dollars no longer offers the security it once did. In this context, assets like Bitcoin, which escape traditional monetary policies, can emerge as an alternative store of value for those who anticipate the continued devaluation of the dollar and are looking for ways to preserve their wealth.
