$10T asset manager ‘studies’ digital currencies while crypto recoups 2022 losses

Larry Fink, the chief executive of BlackRock, the world’s largest asset manager with around $10 trillion in assets under management, has said his company is “studying” digital currencies due to growing client demand. Meantime, Bitcoin and other cryptocurrencies continued to rise, while bank analysts suggest the Russian war in Ukraine could create a new world financial order, boosting the prices of crypto.

According to Forbes, chief executive Larry Fink wrote this week in a letter to BlackRock shareholders:

“As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients.”

Last year, Fink has publicly dismissed Bitcoin and crypto, saying in a CNBC interview that he doesn’t see much demand for crypto. However, later, BlackRock was joining other Wall Street giants, such as Goldman Sachs, Morgan Stanley and Citi, in planning to let clients borrow from BlackRock by pledging crypto assets as collateral, as reported this February.

As reported this week, Goldman Sachs became the first major US bank to trade crypto over-the-counter (OTC), working with Galaxy Digital crypto merchant bank to offer a Bitcoin-linked instrument called a non-deliverable option (NDO).

Fink, who called Bitcoin an “index of money laundering” earlier, noted that Russia’s invasion of Ukraine and wide-ranging financial sanctions placed on the country could be a catalyst for mass crypto adoption.

“The war will prompt countries to re-evaluate their currency dependencies,” he said in the letter. “Even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate.”

In Fink’s words, the war in Ukraine has also upended the world order that had been in place since the end of the Cold War, so he suggests it will “put an end to the globalization we have experienced over the last three decades.”

“It has left many communities and people feeling isolated and looking inward. I believe this has exacerbated the polarization and extremist behavior we are seeing across society today,” he noted.

Alongside Fink’s comments, others financial analysts see strict Russia sanctions, which have included the country’s banks being excluded from the SWIFT interbank messaging service and restrictions put on the central bank’s foreign exchange reserves, as a system shock.

“We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West,” said a report by Zoltan Pozsar, global head of short-term interest rate strategy at the major investment bank.

Also, a Credit Suisse analyst recently suggested the Russian war in Ukraine will create a new world financial order that could boost the price of Bitcoin and other cryptos.

Meanwhile, Bitcoin has completely erased the losses it saw at the start of the year. Within the first 30 days of 2022, Bitcoin’s price fell from $47,733 to $35,070 and has since struggled to regain ground.

This week, Bitcoin and other cryptocurrencies have soared to almost $48,000, following a wave of good news for the crypto market.

The BTC price jumped after a senior Russian official said the country would accept Bitcoin as payment for its energy exports. While, the Ethereum (ETC), Solana (SOL), and Cardano (ADA) prices have continued to climb as well.

“Most of the recent price action has been highly influenced by the overall macro market sentiment and tracking equities,” Gandhi told Decrypt. “The other factors adding up to these external forces are derivatives and whales involved in high-volume trading.”

Even though Bitcoin has often been called a safe haven asset, where investors move their money when traditional markets dip, it has followed the traditional markets since stocks crashed at the onset of COVID. Meantime, the correlation between Bitcoin and the S&P 500 index reached a 17-month high.