Bitcoin and crypto prices have surged over the last week, helped by growing expectations of a huge China stimulus bombshell.
The bitcoin price has touched its all-time high of just under $74,000 per bitcoin as Tesla billionaire Elon Musk declares a “financial emergency” that some think will send the bitcoin price even higher.
Now, as the Federal Reserve grapples with a “nightmare” scenario, Larry Fink, the chief executive of the world’s largest asset manager BlackRock, has warned he doesn’t think the Fed is going to cut rates at the pace expected by markets.
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“We’re not going to see interest rates as low as people are forecasting,” Fink, who oversees BlackRock’s $10 trillion in assets, said during a Bloomberg panel that was part of Saudi Arabia’s annual flagship investment conference, the Future Investment Initiative.
Fink predicted just one Fed interest rate cut before 2025 against market expectations of two.
“I think it’s fair to say we’re going to have at least a 25 (basis-point cut), but, that being said, I do believe we have greater embedded inflation in the world than we’ve ever seen,” Fink warned.
Last month, the Fed surprised traders with a 50 basis point cut to interest rates, kicking off a reduction cycle after interest rates were ramped up at a historical clip as lockdown-induced inflation threatened to spiral out of control.
Expectations that interest rates will come down sharply this year have fueled a bitcoin price boom through 2024, with bitcoin and the wider crypto market bouncing back along with stock markets.
Sky-high interest rates have pushed up payments on the $35 trillion U.S. debt pile, with Tesla billionaire Elon Musk last week warning “the interest payments on the debt are 23% of all federal tax revenue” and declaring the situation a “financial emergency.”
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Meanwhile, SkyBridge Capital founder Anthony Scaramucci has predicted the Fed will allow inflation to run hotter than it has previously to escape its “tremendous debt crisis”—with the bitcoin price soaring as a result.
“There’s a lot of people who think that the U.S. is about to enter into this tremendous debt crisis. And I believe that we’re going to solve … that and we’re going to stop that from happening,” Scaramucci told the Reuters Global Markets Forum.
Scaramucci said he expects the bitcoin price to hit $170,000 by mid-2026, which would give bitcoin a market capitalization of around $3.3 trillion, due to bitcoin’s “fixed limited supply, and what I think is very high demand.”
That demand has been boosted this year by the long-awaited arrival of a fleet of spot bitcoin exchange-traded funds (ETFs) on Wall Street, led by BlackRock’s bitcoin fund.
On Wednesday, BlackRock’s bitcoin ETF saw $872 million worth of net inflows, marking the fund’s largest inflow since its January launch and surpassing the previous record high on March 12.
“The recent surge in BlackRock’s IBIT inflows is driven by several key factors, including central banks’ global shift towards reducing interest rates, which has boosted liquidity and made capital more accessible for investors,” Rachael Lucas, crypto analyst of BTCMarkets, told The Block.