Bitcoin’s rapid surge over the past year has drawn fresh warnings from financial leaders, with BlackRock CEO Larry Fink cautioning that the cryptocurrency could erode the US dollar’s status as the world’s reserve currency, Forbes reports.
In his annual letter to BlackRock shareholders, Fink highlighted concerns over the growing US national debt, which has surpassed $35 trillion, and the rising cost of servicing it—expected to exceed $952 billion this year alone. According to Fink, this trajectory could weaken confidence in the dollar and push investors toward alternative assets like bitcoin.
“The US has benefited from the dollar’s global reserve status for decades. But that’s not guaranteed to last forever,” Fink wrote. “If the US doesn’t get its debt under control, if deficits keep ballooning, America risks losing that position to digital assets like bitcoin.”
Bitcoin’s price hit a record $110,000 per coin in January before retreating amid market uncertainty. Despite the pullback, the cryptocurrency remains a hot topic on Wall Street, particularly as institutional investors increasingly embrace digital assets.
Fink, who has championed bitcoin’s integration into mainstream finance, has played a key role in launching BlackRock’s bitcoin exchange-traded fund (ETF), which has quickly become one of the fastest-growing in history. The success of bitcoin ETFs, which collectively surpassed $100 billion in assets late last year, has reinforced the cryptocurrency’s growing legitimacy in traditional markets.
However, Fink emphasized that bitcoin’s rise presents a paradox.
“Decentralized finance is an extraordinary innovation. It makes markets faster, cheaper, and more transparent,” he wrote. “Yet that same innovation could undermine America’s economic advantage if investors begin seeing bitcoin as a safer bet than the dollar.”
The Federal Reserve’s policies will play a critical role in shaping bitcoin’s trajectory. Traders are closely watching for signs that the Fed might pivot from its tight monetary stance, particularly as inflationary concerns resurface.
Fink also warned that former President Donald Trump’s proposed trade policies could lead to a resurgence of inflation, potentially limiting the Fed’s ability to cut interest rates in the near term. Such conditions, he suggested, could further fuel demand for alternative assets like bitcoin.
Echoing similar concerns, Tesla CEO Elon Musk has repeatedly called attention to the growing national debt, warning of a potential financial crisis. The debate over government spending and fiscal policy is likely to intensify in the coming months, particularly with the 2024 election looming.
