The world’s largest investment manager BlackRock runs $5.7 trillion in assets. But not in Bitcoin, or not yet anyway.
BlackRock has a spotty record predicting emerging technologies such as the Internet, yet it has massive influence in markets and with policymakers. Its global chief strategist for multi-asset investments, Isabelle Mateos Y Lago, recently said flatly that “Bitcoin isn’t investable at this stage.”
Asked to clarify what developments would be required to make Bitcoin and other cryptocurrencies “investable” Lago responded: “There are issues. Safety issues, liquidity issues, regulatory risks.
“This is a very new thing and not something we’re advising anyone to put their money in unless they are willing to lose their entire stake.”
She then did a near complete reversal, adding that cryptocurrency investing is “new and interesting.”
“The fact that interest has persisted despite the repeated hacks and regulators trying to weed out all the illegal uses suggest that maybe there is something to it,” she said.
“It’s evolving very fast and were keeping it under close review because it’s an interesting development.”
When asked if the underlying blockchain technology and new companies such as Ethereum are worthwhile investments, she seemed to miss the distinction between Bitcoin and blockchain, saying that “the question is if there is a safe way to get in and out.”
Mark Wiedman, head of iShares exchange-traded funds at BlackRock, told Bloomberg that he does not envision the company launching a Bitcoin or digital currency ETF.
Meanwhile, Belinda Boa, the firm’s head of active investments for Asia-Pacific for the firm, said that Bitcoin has “bubble-like valuations,” reported Bloomberg.
This generally negative reaction to cryptocurrencies is highlighted by the fact, unmentioned during the Bloomberg interview, that top BlackRock executives have left the firm so start a crypto hedge fund.
Former Blackrock bond specialists Michael Wong and Adam Grimsley have launch a Bitcoin hedge fund dubbed Prime Factor Capital. They told Bloomberg that the fund will start trading cryptocurrencies in April.
“One of the allures of cryptocurrency is that it is not tied to a traditional asset class, something that can’t be said of bonds. In the latter case, valuations are tied to the moves of central banks instead of an individual bond’s performance,” Grimsley said.
“That makes it hard to differentiate from all the other bond funds out there. With cryptocurrencies, investors can get returns that are not correlated.”
In other words, the exact same risks that Lagos kept repeating as unacceptable are makes it possible to make a lot of money from the hedge fund point of view.
BlackRock, meanwhile, is using machine learning to launch an ETF, but blockchain and cryptocurrencies won’t be part of the assets chosen by the computers in charge of trading.