BlackRock CEO calls Bitcoin stronger after leverage reset

BlackRock CEO Larry Fink believes the Bitcoin (BTC) and crypto market is in a strong position following the unwinding of excessive leverage.

The CEO of the world’s largest asset manager also expressed optimism about traditional financial markets, expecting technological transformation to provide tailwinds over the next twelve months.

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Fink addresses Bitcoin leverage reset  

During an interview with CNBC’s “Squawk on the Street” on July 15, Fink was asked about the potential risks posed by leveraged speculation in the Bitcoin and crypto markets. While he considers leverage in the current financial system to be significantly lower than it was before the 2008-2009 financial crisis, he specifically pointed to leverage in Bitcoin and altcoins.

“I have always been concerned about leverage in Bitcoin and cryptocurrencies. There were too many market participants operating with excessive leverage. That is why this correction occurred, and I believe the market is now more stable at its current level.”

Fink views this as a healthy development for the Bitcoin market. However, he did not provide a specific price forecast.

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Fink predicts AI-driven stock rally

Beyond Bitcoin, Fink also shared his outlook for traditional financial markets over the next twelve months. BlackRock expects artificial intelligence to drive further gains in productivity and profit margins: 

“I am very optimistic about the markets over the next twelve months. I believe the technological revolution will lead to higher margins at an increasing number of companies.”

Fink cited BlackRock itself as an example. The asset manager’s operating margin increased by 260 basis points over the past twelve months, while assets under management grew by approximately $1 trillion and the number of employees remained unchanged.

However, Fink’s optimism comes with one important condition: the expansion of physical infrastructure must keep pace with the growing demand for computing power. According to him, demand from major cloud and technology companies continues to exceed the available supply:

“My concern is not a bubble. My concern is that we cannot build fast enough. We need to provide more energy without raising electricity prices for consumers if the United States wants to remain the center of the AI revolution.”

For Bitcoin, this could provide an indirect price catalyst. Bitcoin and altcoins generally benefit from a bull market in equities. A bullish environment in traditional financial markets could therefore become an important source of support for the crypto market.

Bitcoin was trading at $64,620 at the time of writing.

Related: Larry Fink stays bullish as one BlackRock unit sheds nearly 40%