BlackRock's volatility warning casts doubt over Bitcoin’s future appeal

A warning by BlackRock that the market could see some volatility, along with a slower-than-expected path of interest rate cuts from the Federal Reserve puts into question how Bitcoin will do in the future.

Austin Arnold, co-host of Altcoin Daily, sat down with investor Brock Pierce to discuss everything from interest rates and broader economic factors to why those factors help or hurt Bitcoin's appeal.

That was followed by Pierce reiterating BlackRock's sentiments, explaining, "We're not going to be seeing cut rates, and as long as there are high yields and high interest rates in other asset classes, Bitcoin is less appealing." He also reaffirmed that Bitcoin has remained highly correlated with the general market, contrary to early speculation that it would hedge against economic turmoil.

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"Interest rates lowering makes Bitcoin more attractive ... we have not broken free as a non-correlated asset yet."

Asked about the possibility of a rate hike or no cuts at all, Pierce deferred to BlackRock's chief, saying "I trust that [Larry Fink] probably knows better than I do." Investors are pricing in a roughly 70 per cent chance the Fed will cut interest rates by 25-basis points next week, according to the CME's Fed Watch tool.

Although acknowledging that Bitcoin's price might drop below $40,000, Pierce remained sceptical if the Fed has such immense influence on Bitcoin's price, suggesting the market might not be as responsive as many would expect to rate changes.

Pierce also pointed to BlackRock's involvement in the cryptocurrency space as a force for good. "I think that BlackRock is probably having as big a positive impact on the industry as a presidential candidate," he said, adding the institution's endorsement lends credibility to Bitcoin.

According to Pierce, all these mainstream financial big-name endorsements help wear off some scepticism over Bitcoin's future.

He concluded by telling his audience to be careful and aware: "I've never told anyone to make a substantial investment in bitcoin... invest in yourself, in your own knowing." He called for listeners to invest based on understanding, not third-party opinion, and look at Bitcoin from a long-term perspective.