BlackRock’s Larry Fink admits to the potential of ‘asset of fear’ Bitcoin

Larry Fink, chief executive officer of BlackRock, called the largest cryptocurrency by market cap an asset of fear at the New York Times DealBook Summit while defending its role in investor portfolios.

He said, “Bitcoin is an asset of fear. And when you’re less fearful, like we had a trade agreement with China, you saw a shift downward. There are conversations this week that there may be some type of settlement in Ukraine. Bitcoin fell a little bit.”

His comments referenced recent market movements, which according to him, were in response to macro factors.

“You own Bitcoin because you’re frightened of your physical security. You own it because you’re frightened of your financial security,” Fink said, adding that the fundamental long-term driver remains concerns about the debasement of financial assets due to deficits.

BlackRock’s Fink journey as a BTC convert

In 2017, Fink, a skeptic of Bitcoin at the time, dismissed the cryptocurrency as little more than an index for money laundering.

Now, he acknowledges his earlier skepticism was misguided, and his latest comments also reflect how far Bitcoin has come.

His company’s iShares Bitcoin Trust (IBIT), launched in January 2024, was one of the first Bitcoin Exchange-Traded Funds (ETFs) in the US and also holds the record of being the fastest to hit over $70 billion in assets and ranks number one in terms of volume, assets under management, and market capitalization.

Volatility and the timing trap

Fink also admitted to Bitcoin’s challenges, particularly for those treating it as a trading vehicle rather than a long-term hedge.

According to Fink, this is the third such decline since IBIT’s creation, where Bitcoin price has experienced a roughly 20 to 25% drawdown. The multi-week drop from its $125,000 high to the mid-$90,000s is the latest episode.

“If you bought it for a trade, it’s a very volatile asset, you’re going to have to be really good at market timing, which most people aren’t,” Fink warned. He noted that Bitcoin remains heavily influenced by leveraged players.

An optimistic outlook for Bitcoin

The asset manager’s embrace of cryptocurrency extends beyond Bitcoin itself. Fink has positioned tokenization of financial assets as an even larger opportunity, envisioning a future where all securities exist in digital form on blockchain infrastructure.

At the summit, Coinbase co-founder Brian Armstrong joined the discussion, in what highlighted the growing alignment between traditional finance and the cryptocurrency industry.

Both Fink and Armstrong believe that the current market event is not a sign of an impending doom for Bitcoin.

Armstrong said that there is no chance that Bitcoin will ever drop to zero, with Fink saying that he sees “a big, large use case for Bitcoin” in the future.

Armstrong also called on the US government to pass the pending CLARITY Act, which could provide clearer frameworks for cryptocurrency operations and establish working regulations for the industry that won’t be tampered with by another administration.