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Bitcoin 'thrives on its anonymity'

BlackRock CEO Larry Fink.

BlackRock CEO Larry Fink.

Bitcoin, whose value has fluctuated significantly this month, remains a "speculative" investment that thrives because of the crypto-currency's anonymous nature, BlackRock CEO Larry Fink said yesterday.

"The reason why it does so well is it is anonymous. It's anonymous, and it's cross-border," Fink, whose firm oversees nearly $6 trillion of assets, said at the Reuters Global Investment 2018 Outlook Summit. "If you legitimise it, you know who your counterparties are...the question is how many people will use it if you have to acknowledge you are a buyer or a seller."

Fink called Bitcoin a "very speculative instrument. More importantly, it is an instrument that people use for money laundering."

The value of Bitcoin plunged as much as 29% from its 8 November record high of $7 888 following the cancellation of a planned technology upgrade and amid persistent concern of a bubble. Bitcoin recouped some of its losses yesterday.

Investors who have held Bitcoin for the long term have fared well.

Even after the recent drop, its value has increased more than six-fold this year. Investors who held on longer have been rewarded even more: in 2011, Bitcoin traded at below $3.

Fink, however, said most investors with long-term horizons, and who are keeping "record amounts" on the side-lines, should be focused on traditional assets such as stocks and bonds.

He said that for a 30-year-old person, "100% equities is the right investment strategy," at a time when the world's economies are enjoying "synchronised growth" for the first time since the financial crisis.

Bitcoin "is tiny in the scheme of financial markets," Fink said. Overall, "there's too much focus on Bitcoin," Fink said. "I don't know why it has so much fascination for the press."

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