Oct 26, 2024
There’s a well-known but poorly understood investment that the head of the world’s largest asset manager, BlackRock CEO Larry Fink, thinks is an alternative to gold.
During the company’s third quarter earnings call earlier this month, an analyst from Barclays asked what a new president in the White House more friendly to the cryptocurrency industry could mean for business opportunities.
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“I mean, we believe Bitcoin is an asset class in itself. It is an alternative to other commodities like gold,” said Fink, adding that this space could grow to also include Cerium, a metal that may potentially be used in blockchain technology. “So if we can create more acceptability, more transparency, more analytics related to these assets, then it will be expanded.”
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An alternative to gold?
BlackRock launched its first-ever spot bitcoin ETF in January this year. With almost $27 billion in assets, it’s been a resounding success and is now by far the world’s biggest fund for the cryptocurrency.
Fink sounded optimistic about cryptocurrency investing, comparing its gradual expansion to that of the mortgage market years ago.
But the comparison to gold is also noteworthy. It’s a strong statement about a once controversial digital currency solidifying its position as a mainstream investable asset class. Back in 2017 Fink said Bitcoin was “an index of money laundering,” arguing the crypto currency just measures how much money is being made from criminal activity.
While people like MicroStrategy CEO Michael Saylor are very bullish on Bitcoin and believe it is a store of value, there are plenty of skeptics like economist Peter Schiff who would scoff at the idea that Bitcoin is “digital gold” or “the new gold.”
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The future and investing in spot Bitcoin ETFs
The price of Bitcoin has risen over 50% since the start of the year, and despite a perception that the former U.S. President Donald Trump is more friendly to cryptocurrencies, industry players speaking to CNBC didn’t seem to fear a win for Vice President Kamala Harris.
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“This election has brought the crypto conversation to the forefront … Biden has pretty much ignored the industry,” said Daniel Cawrey, chief strategy officer at crypto wallet operator Tonkeeper. “Unlike Biden, however, Harris has not been taking a hands-off approach to crypto since elevating to be the Democratic nominee. Her campaign has been talking with stakeholders in the industry, which could mean better guidelines, which the industry needs.”
“The election results will have minimal effects on how bitcoin performs over the next 12 to18 months,” said Tyrone Ross, founder and president of registered investment advisor 401 Financial. “There’s still a lot of firms working through ETF access, there’s rate cuts coming and trading by retail at the centralized custodians are at their lows. [It] definitely will be harder for young startups, but as a developing institutional grade, quality asset it will continue to prove itself no matter who is in office.”
If you’re interested in adding Bitcoin to your portfolio, you can buy it directly from a crypto exchange or invest in exchange-traded funds (ETFs) that track its price movements. Remember, however, that Bitcoin is an extremely volatile asset and you should keep in mind your risk tolerance before you dip your toes in it.
There are several spot Bitcoin ETFs to choose from, including the iShares Bitcoin Trust ETF (IBIT), which has an expense ratio of 0.25%, and the Grayscale Bitcoin Trust (BTC), which will soon be known as the Grayscale Bitcoin Trust ETF and has a 1.5% expense ratio.
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William Koblensky Varela is a Staff Reporter at Wise who has worked as a journalist for seven years covering finance, local news, politics, legal issues and the environment.
