Blackrock’s chief investment officer says that he can see bitcoin rising significantly. He said, “I like volatile assets that have upside convexity.”

Blackrock CIO Sees Significant Upside to Bitcoin

Rick Rieder, Blackrock’s chief investment officer (CIO) of Global Fixed Income, was asked Friday in an interview with CNBC about his view on bitcoin now that the cryptocurrency is legal tender in a country.

Blackrock, the world’s biggest asset manager, had $9.5 trillion in assets under administration (AUM) as of the end the second quarter. Rieder also heads the Fundamental Fixed Income and Global Allocation Investment Teams businesses. His assets total approximately $2.4 trillion.

Rieder began his comment on the widespread opinion that cryptocurrency is “a hedge” or “an alternative [currency].”. He cited its correlation to equities as well as risk assets and said that cryptocurrency was not a great hedge. Noting that its price can move 15% a day, he reiterated, “I’m not sure it’s a great hedge.”

Regarding cryptocurrency being “an alternative currency,” the author stated:

Part of why I own a small piece of bitcoin is I do think there are more people who are going to enter that fray over time … I like assets that are volatile that have upside convexity. I can see bitcoin rising significantly.

Rieder pointed out that Blackrock holds a “very modest” amount of cryptocurrency. He acknowledged that bitcoin is volatile and said he doesn’t see it as a key asset like stocks or bonds. He does see value in small amounts of bitcoin as a speculative tool for a portfolio.

In November last year, he said that cryptocurrency was here to stay and could even replace gold to a large extent.

Do you agree with Blackrock’s CIO? Please let us know your thoughts in the comments below.

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