BlackRock Was Tipped Off About High Inflation, Uses Bitcoin to Hedge

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Amid escalating inflation concerns, BlackRock, a leader in asset management, is shifting focus to Bitcoin as a hedge.

This strategy follows reports that an economist from the Bureau of Labor Statistics (BLS) shared privileged inflation data with top Wall Street firms, including BlackRock.

BlackRock Received Inflation Data in Advance

Bloomberg obtained records showing frequent communications from the BLS economist about US inflation, specifically within the shelter and used cars categories of the consumer price index (CPI). These exchanges reveal that the economist gave detailed insights to a select group he called “my super users.”

“This info gave traders a massive edge on their bets. How is this not insider trading?,” X account Insider Tracker said.

The discovery of these communications has sparked investigations into their potential impact on asset trading and Federal Reserve policies. In response, Emily Liddel, BLS Associate Commissioner for Publications and Special Studies, emphasized the agency’s commitment to fairness.

“Obviously this has been an embarrassment for the agency. The public puts a lot of trust in us to be fair, and our data providers put a lot of trust in us for the data to be secure. It’s our goal to repair that trust.” Liddel explained.

In the wake of these disclosures, BlackRock has been particularly proactive with its bullish stance on Bitcoin. The cryptocurrency’s limited supply and decentralization make it appealing as an inflation hedge.

Following the International Monetary Fund’s recent caution about US fiscal deficits, which they claim are stoking inflation and posing global risks, this strategy gains importance. BlackRock’s CEO, Larry Fink, recently shared his positive outlook on Bitcoin.

“I’m very bullish on the long term viability of Bitcoin. That surprised me how much that’s gone up. We are creating now a market that has more liquidity, more transparency, and I’m pleasantly surprised and I would have never predicted it before we filed it, that we were going to see this type of retail demand,” Fink said.

This optimistic view is reflected in the performance of BlackRock’s iShares Bitcoin Trust (IBIT), which accumulated over $15.3 billion, marking it as the fastest-growing Bitcoin ETF.

Bitcoin Spot ETF Cumulative Flow. Source: Farside Investors

However, this week. the interest in spot Bitcoin ETF seems to be cooling down. Specifically, IBIT received just $117.3 million in inflows in the past three days. Despite a slowdown, with a record low inflow of $18.1 million this Wednesday since its January 2024 inception, the ETF’s success signifies a shift in investor preferences amid financial uncertainty.