BlackRock Remains Cautious in Recommending Cryptocurrencies to Large Investors

• BlackRock cautious about cryptocurrencies
• Focus on short-term Treasury bonds
• Continued volatility in the market

As the global economy faces uncertainty, investment giant BlackRock, with a significant holding in cryptocurrencies, is reluctant to recommend Bitcoin and Ethereum as safe alternatives for hedging. Despite holding approximately $48 billion in Bitcoin and $2 billion in Ethereum, the firm is not promoting cryptocurrencies as a hedge against the potential economic downturn that lies ahead.

Jean Boivin, head of the BlackRock Investment Institute, warns of growing market instability, exacerbated by recently heightened trade tensions. In a note to clients, Jean noted that President Donald Trump’s imposition of new tariffs has triggered a sharp sell-off in assets considered risky. “Trade tensions have triggered a sell-off in risk assets,” Jean said in a note to clients on Tuesday.

The market reaction was swift and negative, with traders seeking refuge in assets considered safer. In an immediate response, BlackRock downgraded its position in U.S. stocks to “neutral” from “overweight,” while upgrading short-term U.S. Treasuries to “overweight” from “neutral.” “We are shortening our tactical horizon… and reducing risk,” Jean said, explaining the firm’s new strategy of focusing on less volatile investments over a three-month period.

During a brief market recovery, the phenomenon known as the “dead cat rebound” was observed, where even after a temporary rise, major indices such as the S&P 500 and Dow Jones ended up closing lower. This underscores the volatility and instability that continue to characterize the current market.

In the face of uncertainty surrounding trade policies, Jean Boivin advises caution. BlackRock continues to hold off on recommending cryptocurrencies to its clients, taking a defensive stance while awaiting greater clarity on trade issues. Until more information becomes available, Jean suggests that short-term Treasury bonds remain a safe investment, given persistently high inflation and concerns about the U.S. deficit.