BlackRock’s Head says Bitcoin is Not a Risk-On Asset

The Bitcoin Geek
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BlackRock’s Head says Bitcoin is Not a Risk-On Asset

In a recent interview, Robbie Mitchnick, who leads BlackRock’s digital assets, cleared up a common misunderstanding in the crypto world. He says that people have wrongly labeled Bitcoin (BTC) as a “risk-on” asset.

“What’s happened in the crypto industry is a bit of an own goal,” Mitchnick told Bloomberg on Sept. 24. He explained that many crypto publications have wrongly assumed that Bitcoin’s natural ups and downs make it behave like stocks or other risky assets.

Bitcoin’s Fundamental Drivers Are Unique

Mitchnick emphasized that Bitcoin’s long-term value drivers are entirely different from those that influence stocks and other risk assets. In fact, in some scenarios, Bitcoin may even be inversely correlated with equities.

“When you look at it fundamentally, the drivers of Bitcoin long-term are very different from what’s going to drive equities and other so-called risk assets,” Mitchnick said. This mischaracterization has confused investors about how to categorize Bitcoin’s behavior in a portfolio.

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Bitcoin as a ‘Unique Diversifier’

In BlackRock’s latest Bitcoin report, they show that Bitcoin is a “unique diversifier” and a hedge against money and global risks. Mitchnick says Bitcoin is special because it’s scarce, global, decentralized, and not controlled by any one country. These traits make it different from other assets and protect it from country-specific or other common risks.

“It confuses investors when people talk about Bitcoin as risk-on because, based on the properties I just described, you would think of it as risk-off,” Mitchnick said.

Risk-On vs. Risk-Off: Where Does Bitcoin Stand?

What is a Risk-On Asset?

Risk-on assets typically thrive in favorable economic conditions. These include stocks, especially in growing areas like technology, certain goods, and some cryptocurrencies. Investors flock to these assets during bullish markets to maximize returns.

What is a Risk-Off Asset?

In contrast, risk-off assets are sought after during market uncertainty or downturns. Examples include gold, silver, government bonds, and the US dollar. These assets generally retain value and offer stability when the market experiences volatility.

Mitchnick says Bitcoin is more of a risk-off asset because its unique traits help it do well during times of global or economic trouble.

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Bitcoin Outperforms the S&P 500 in Times of Crisis

BlackRock’s analysis shows that Bitcoin has done better than stock indexes like the S&P 500 during big global events. This supports the idea that Bitcoin is a risk-off asset, not one that moves like tech stocks or other risky assets.

BlackRock’s Bitcoin ETF and Coinbase Partnership

BlackRock’s role in crypto is growing with its iShares Bitcoin Trust (IBIT), a spot Bitcoin ETF. This lets big investors invest in Bitcoin through a regulated way.

Recently, a change to the ETF caused concern. It now requires Bitcoin withdrawals from Coinbase, the ETF’s custodian, within 12 hours. Mitchnick downplayed the worry, saying it’s a normal update to improve how things work with Coinbase.

BlackRock’s Strategic Approach

“Honestly, nothing important has changed here,” Mitchnick explained. He said the update is just part of the normal process of improving systems as BlackRock gets more involved in crypto ETFs.

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PlanB Predicts Bitcoin to Hit $1 Million by 2025

Amid the growing excitement around Bitcoin ETFs, PlanB, a prominent crypto analyst and creator of the Bitcoin stock-to-flow (S2F) model, has made a bold prediction. In a post on Sept. 24, PlanB suggested that Bitcoin could reach a new all-time high of $1 million by the end of 2025.

PlanB’s Bold Prediction

PlanB’s Bold Prediction
PlanB’s Bold Prediction

According to his scenario, a Trump election victory in November would end the “war on crypto” in the United States, driving Bitcoin to $100,000. By January 2025, crypto companies would return to the U.S., pushing Bitcoin to $200,000. As Trump builds a strategic Bitcoin reserve in April, the price could soar to $400,000, followed by a massive surge to $1 million due to “face-melting FOMO” between July and December.

While PlanB’s prediction is optimistic, many in the crypto community have expressed skepticism. One commenter humorously remarked, “If all of this will be true, I will run naked in the streets.”

Conclusion

BlackRock’s view on Bitcoin goes against the common belief. Robbie Mitchnick argues that Bitcoin is not a risky asset like stocks. Instead, it is a unique, decentralized option that may act more like a safer asset. With BlackRock’s spot Bitcoin ETF giving big investors access to Bitcoin, the discussion about Bitcoin’s place in a balanced portfolio will likely grow as new predictions and market trends unfold.

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