BlackRock: Bitcoin's 50% Crash Was a Leverage Purge, Not a Reset

BlackRock has published an updated look at bitcoin’s investment case following the asset’s roughly 50% slide from its October 2025 peak above $124,000 to cycle lows below $60,000 in June 2026.

A positioning problem, not a fundamentals problem

The report, authored by digital assets heads Robert Mitchnick and Will Su, pins the drawdown on leverage rather than any deterioration in bitcoin’s underlying story.

Futures open interest had swelled past $90 billion by early October, with roughly 80% of that sitting in offshore perpetual futures offering up to 125x leverage.

When the U.S. announced fresh China tariffs on Oct. 10, 2025, bitcoin’s open interest fell $20 billion in a single day, the largest drop on record.

The authors wrote:

“We view bitcoin’s ~50% pullback from October 2025 highs as a positioning correction rather than a change in its investment case.”

Flows rotated into AI

Spot bitcoin ETPs pulled in $60 billion between January 2024 and October 2025, but have since bled roughly $5 billion while AI-themed funds absorbed $46 billion.

BlackRock described the shift plainly:

“In our view, the rotation into AI-exposed equities likely competed for capital and became a net drag on investors’ bitcoin allocations.”