Blackrock, the world’s largest asset manager, laid out its vision for 2026 and – read past its bearish outlook for US bonds and the world’s largest economy – it’s a bullish plan for institutional crypto adoption.
The US federal debt will swell above $38 trillion, setting the tone for a market outlook defined by fragility and the failure of traditional hedges, according to the report. For crypto, this is good news because this economic environment will lead to accelerated adoption of digital assets by Wall Street giants.
More government borrowing “… creates vulnerabilities to shocks, such as increases in bond yields linked to fiscal concerns or political tensions between managing inflation and debt servicing costs,” the report said.
The warning on long-term US Treasuries, the traditional backbone of finance, is signal AI-driven leverage, and government debt is likely to make the financial system more fragile and could force institutions to turn to alternative assets like bitcoin as a hedge against fiscal failure.
The institutional flood of money into crypto, exemplified by BlackRock’s $100 billion in bitcoin ETF allocations, its biggest source of revenue, promises to push digital assets to all-time highs next year, with some analysts predicting the biggest cryptocurrency will rise to more than $200,000.
This is all part of a “modest but meaningful step towards a tokenized financial system,” which provides the decentralized infrastructure to handle the private credit and wealth management institutions that seek it. CEO Larry Fink described tokenization as the next generation of financial markets. The world’s largest asset manager report says it clearly: Where sovereign debt fails, the digital economy begins.
As for stablecoins, digital assets whose value is tied to a real-world asset like the dollar or gold, “they’re no longer niche, they’re becoming the bridge between traditional finance and digital liquidity,” said Samara Cohen, Blackrock’s global head of market development.
The increase in computing power to drive artificial intelligence is already benefiting bitcoin miners, who are able to parlay their energy deals into new uses as rising demand for high-performance computing increases the value of their infrastructure. AI development is not limited by chips, but by power, the accordion report. In fact, AI data centers could require up to 20% of current US electricity by 2030.
Several publicly traded mining companies reported increased earnings this year, not just from mining, but from leasing data center capacity to AI companies in need of power-hungry GPUs.
