Bitcoin’s volatility hasn’t scared BlackRock away. Instead, they’re embracing it. They call Bitcoin a “unique diversifier” for investors. It’s not your typical “risky” asset, they say.
Sure, Bitcoin swings all over the place in the short term, but over the long haul, it behaves differently. It doesn’t follow the rules of stocks or bonds. And for BlackRock, that’s what makes it attractive.
BlackRock said that investors keep asking them the same question. ‘Is Bitcoin “risk on” or “risk off”?’ The company doesn’t think either label works. Bitcoin isn’t built for traditional finance frameworks, and the usual models just don’t apply. BlackRock sees Bitcoin as a volatile asset. Still, the risks it faces differ from those of other “risky” assets.
It’s decentralized, non-sovereign, and global. That’s why some investors turn to it during crises, especially during geopolitically uncertain situations. Over time, they expect Bitcoin’s adoption to be shaped by global concerns like monetary and geopolitical stability, U.S. political and fiscal issues.
Bitcoin surpasses $1 trillion market cap
Amidst it all, Bitcoin has seen a surge, hitting a market cap of over $1 trillion. That’s quite something for an asset that’s only been around for 15 years. Still though, its potential as a widespread store of value or global payment method is a bit controversial.
What stands out is, Bitcoin has outperformed every major asset class in 7 out of the last 10 years. It has a 100% annualized returns over the past decade, despite also being the worst-performing asset in three of those ten years. Four of its drawdowns were greater than 50%. And still, Bitcoin keeps bouncing back, proving it can recover from huge crashes and hit new all-time highs consistently.
For instance, after the global market sell-off on August 5, Bitcoin dropped 7% in just 24 hours. But by August 8, it had already recouped its losses. BlackRock said over the long term, Bitcoin does its own thing. That makes it a great diversifier for anyone trying to avoid putting all their eggs in one basket.
Bitcoin trades 24/7, which gives it liquidity advantages over traditional assets, especially during times of market stress. But its markets are still young, and most investors are still learning the ropes. That’s part of why Bitcoin behaves so differently from the assets we’re used to. Investors can sell it fast when they need cash, even over the weekend when traditional markets are closed.
