BlackRock CEO Larry Fink stated that an increasing number of individuals are purchasing cryptocurrency and gold due to concerns about losing money as government debts continue to escalate.
During a recent interview at the Future Investment Initiative (FII) conference in Riyadh, Saudi Arabia, Fink explained that "Owning crypto assets or gold are assets of fear." He elaborated that people acquire these assets because they are apprehensive about the devaluation of their existing holdings and are worried about their financial and even physical security.
Investors Turn to 'Fear Assets' Due to Inflationary Pressures
Fink's comments coincide with a growing investor interest in what experts refer to as the "debasement trade." This strategy involves moving away from government-issued fiat currency and investing in tangible assets such as gold, silver, and Bitcoin.
Fabian Dori, Chief Investment Officer at Sygnum Bank, explained that this trend is driven by the weakening purchasing power of currencies, a consequence of loose fiscal and monetary policies.
Dori noted that there are valid reasons for private investors, banks, and institutions to consider hedging their portfolios with Bitcoin. However, he also cautioned that the rapid price fluctuations of cryptocurrencies necessitate robust risk management systems and continuous monitoring.
Global Debt Concerns Are Rising
Data from the International Monetary Fund (IMF) indicates that the United States' government debt is projected to reach 143.4% of its total economy by 2030. This figure is expected to surpass the debt levels currently seen in Italy and Greece.
The IMF also forecasts that the U.S. will maintain a substantial annual budget deficit, exceeding 7% of its GDP, through 2030. This outlook has caused significant concern among many investors, prompting them to seek ways to protect their wealth from potential inflation and currency depreciation.
Recently, Bitcoin reached a record high exceeding $126,000. However, its price experienced a sharp decline following President Donald Trump's threat to impose 100% tariffs on China. This market event led to the liquidation of approximately $19 billion in leveraged crypto futures, and Bitcoin briefly fell below $110,000. As of the latest reports, the cryptocurrency is trading around $115,162.
Fink highlighted that the U.S. continues to depend significantly on foreign investors for its Treasury asset purchases, with an estimated 30% to 35% of Treasury sales being acquired overseas. Despite these dependencies, he added that many investors still perceive the U.S. as the most attractive investment destination for the upcoming 18 months.