BlackRock co-founder and CEO Larry Fink said that while investors are worried about inflation risk hurting their portfolio, his $9 trillion fund has seen “very little investor demand” for cryptocurrencies.
Fink said he believes the long-term trend for the U.S. stock market remains strong and could rally further, even after a robust rally over the past year since the coronavirus-driven plunge in stock prices.
The Federal Reserve has refrained from hiking interest rates despite inflation projected to exceed the 2 percent target it set for the economy, saying it will let price growth run hotter than usual in hopes of driving a stronger recovery and tighter labor market.
Indicators however show that prices will continue to spike even as Jerome H. Powell, the Fed chairman, downplays inflation risks.
Inflation in the U.S. largely came in below the central bank’s target in the years following the 2008 financial crisis, but it’s been above that in recent data readings, including Tuesday’s consumer price index report for the month of June.
“It is my view that inflation is going to be more systematical,” Fink told CNBC in an interview, adding that he saw “very little investor demand” for cryptocurrencies.
Bitcoin, the largest cryptocurrency by value, slipped about 55 percent after hitting a record high of $64,000 in mid-April to around $28,800 on June 22, while other coins such as ether and dogecoin saw much deeper pullbacks.
The crypto volatility has prompted Swiss Investment Bank UBS to ask investors to stay away from speculative assets. UBS said it believes that regulation poses a significant risk to digital assets, according to a note released earlier this week
BlackRock controls $9 trillion, making it the world’s largest money manager. It makes most of its money handling $9 trillion in other people’s money — investments for outside clients, mostly institutions such as public pension plans, endowments, and foundations. The stock market offers a better less risky alternative to crypto, Fink said. He predicts that the stock market will rise moderately in the second half of 2021.
“Maybe it’s going to be very moderate for the next six months as we digest how the world is able to handle the delta variant and the speed in which vaccinations occur throughout the world,” Fink said, referring to the highly transmissible coronavirus strain that’s concerning public-health officials.
“I worry about inflation. I do not believe inflation is going to be transitory,” Fink said.
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Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?