In an interview this week, CEO of BlackRock Larry Fink attributed the recent positive bitcoin price action as driven by a “flight to quality” given the heightened global unrest over the last few weeks. The importance of the viewpoint can’t be overstated. A once outspoken detractor of bitcoin (in 2017, he called bitcoin an “index of money laundering”), Mr. Fink is singing a new tune. Eaglebrook believes this demonstrates a profound and broader shift around the bitcoin investment narrative.
A Shifting Narrative
Once and still widely considered by many a risk asset given its volatility, the story around bitcoin is shifting based on its underlying characteristics and broader education. Bitcoin has features of a risk-off investment, something owned, as Larry Fink described when there is a bid for quality. The wider public is learning that bitcoin, a non-sovereign store of value with a scarce supply should be considered an optimal asset in times of distress.
In a digitally connected economy with global tensions rising, bitcoin limits counterparty risk of all kinds better than any other asset. This quality and its importance are just starting to be understood by the broader public.
Bitcoin has not traded like a safe haven asset, given its status as an emerging asset and during its price discovery phase. But as time goes on, we believe there will be a narrative shift, and bitcoin will go mainstream driven by a US bitcoin ETF likely approved in the coming months and the steady drumbeat of bitcoin education. We believe bitcoin will become a cornerstone investment in diversified portfolios.
