BlackRock CIO Says Up to $9 Trillion in Cash Is Seeking New Investments as Bitcoin Rebounds
Summary
- BlackRock CIO Rick Rieder said as much as $9 trillion in cash sitting outside the market is searching for new investment destinations.
- Forbes said Bitcoin is rebounding alongside stocks, supported by lower oil prices and a recovery in risk-asset sentiment.
- Forbes said the launch of BlackRock's iShares Bitcoin Premium Income ETF (BITA) and the possibility that the FOMC will hold interest rates steady are key factors for the future liquidity environment and Bitcoin's direction.
Forecast Trend Report by Period
Bitcoin continued to rebound in the $66,000 range as a senior BlackRock executive pointed to the potential for a massive pool of sidelined cash to reenter markets. Hopes for a U.S.-Iran agreement, falling oil prices and improving risk appetite could help bring money off the sidelines.
Forbes reported on June 16 that Rick Rieder, BlackRock's chief investment officer for global fixed income, told Bloomberg there is a vast amount of cash sitting outside the market. He said as much as $9 trillion is looking for places to invest.
Rieder said expectations for a record SpaceX initial public offering and hopes for a U.S.-Iran peace agreement are shifting market sentiment. "When good news comes, people think they can get back into the market," he said. "When that happens, it will be pretty explosive."
Forbes said Bitcoin has recently rebounded alongside stocks. Expectations for a U.S.-Iran agreement have increased, while international oil prices have fallen to around $80 a barrel. That has supported sentiment toward risk assets on hopes inflation pressure may ease.
Rieder also argued that Fed Chair Kevin Warsh should avoid raising interest rates. Lower oil prices could help ease price pressure, suggesting the Federal Reserve should be cautious about further tightening.
This week's Federal Open Market Committee meeting is another key variable for markets. Warsh is due to announce his first FOMC decision, and markets are broadly expecting the benchmark rate to remain unchanged. The Fed's assessment of inflation, employment and oil prices will shape liquidity conditions in the second half of the year.
Dean Chen, an analyst at Bitunix, said Rieder's remarks suggest the problem is not a lack of liquidity. Rather, liquidity is searching for a new destination.
Chen said the prospect of a peace agreement, lower energy prices and expectations for renewed capital inflows are supporting sentiment across the crypto market. Still, investors could reassess the liquidity outlook if Warsh places greater emphasis on inflation or balance-sheet reduction at this FOMC meeting.
Markets are also watching BlackRock's expansion of Bitcoin-related products. Forbes said BlackRock's iShares Bitcoin Premium Income ETF, or BITA, is approaching the start of trading. The product combines Bitcoin exposure with options premium income.
Bitcoin remains far below its record high of $126,000 reached in October last year. Still, after defending the $60,000 level and recovering to the $66,000 range, markets are watching whether it can retake $70,000 and how the liquidity outlook shifts after the FOMC.
