BlackRock CEO: “Ukraine war could boost crypto adoption”

By Raffaele Redi

Larry Fink recognises the increasing attraction of stablecoins to investors

BlackRock sign and logo on glass front of their building in San Francisco, USA, Circa, 2019                                 
BlackRock’s CEO told shareholders the company stands with Ukraine – Photo: Shutterstock

Russia’s war in Ukraine may accelerate the adoption of cryptocurrencies and foster the implementation of central bank digital currencies (CBDCs) by western countries, according to BlackRock CEO and chair, Larry Fink.  

On Thursday, the boss of the world’s largest asset manager stressed in a letter to shareholders that BlackRock stood with the people of Ukraine.

He went on to add: “A less discussed aspect of the war is its potential impact on accelerating digital currencies. The war will prompt countries to re-evaluate their currency dependencies.”

The CEO referred to recent work within the Federal Reserve into crypto. He said BlackRock was witnessing increasing interest from its clients and studying “digital currencies, stablecoins and the underlying technologies”.

He said: “Even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate. The US central bank, for example, recently launched a study to examine the potential implications of a US digital dollar.

“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption. Digital currencies can also help bring down costs of cross-border payments, for example when expatriate workers send earnings back to their families.” 

Traditional investors peeping out the crypto market

Alongside the war in Ukraine – with the spectre of recession haunting Western countries – there has been a more dovish than expected reaction from central banks towards high inflation, which in turn may have driven more capital into the crypto market, despite increasing concerns over plunging liquidity.

“As the Fed strikes a more dovish tone and caps upcoming rate hikes, capital is flowing into US equities, likely triggering inflows to bitcoin and crypto as well,” explained Glassnode analysts.

Interestingly, as the bitcoin price consolidated between the $38,000 and $45,000 mark, Glassnode said: “Newer buyers or short-term holders have accumulated heavily in this range.” 

On the other hand, long-term holders keep accumulating bitcoin, according to Glassnode, with many investors moving their supplies out of exchanges at a loss, while derivatives-driven exchanges and a high futures-to-spot volume ratio remarks that those futures are driving the market.

“Although Bitcoin continues to drive the market outperforming altcoins, it is fragile in the short run as the likelihood of a recession increases,” added Glassnode analysts.

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