Speculative positioning became extreme as Bitcoin rallied above $120,000 in October last year, the report said, with futures open interest hitting as high as $90 billion and concentrated heavily in leveraged perpetual futures on offshore exchanges. The report also explained that large-scale deleveraging in the precious metals and crypto markets was triggered by macro-driven risk-off catalysts, including headlines around China tariffs, which led to a liquidation cascade that drove prices below $60,000 by June this year.
Bitcoin was a “dual personality” during the drawdown, BlackRock said, trading alongside risk assets at times as markets deleverage while also acting as a potential hedge during geopolitical disruption, most notably in the wake of the US-Iran conflict. Such periods of higher correlation with stocks have been “episodic rather than structural,” the firm said.
Portfolio Allocation
In BlackRock’s revised 10-year analysis, a small 1-2% allocation of Bitcoin funded from equities would have improved risk-adjusted returns in a traditional 60/40 portfolio, while generally maintaining similar portfolio risk features.
The firm said Bitcoin's role as an emerging global monetary alternative may also offer investors a potential hedge against fiat debasement amid rising government debt and persistent fiscal deficits, writing that there is no "credible path for consolidation on the horizon."
BlackRock is the largest institutional holder of Bitcoin through its iShares Bitcoin Trust (IBIT), which held roughly 746,500 BTC worth roughly $47.8 billion, according to BitcoinTreasuries data.
IBIT stock was down by 0.57% during pre-market trading hours. On Stocktwits, the retail sentiment around IBIT moved to the ‘bullish’ zone from the ‘bearish’ zone, while chatter around it stayed at ‘low’ levels over the past day.
Bitcoin’s price was trading flat over the past 24 hours. On Stocktwits, the retail sentiment around BTC moved to ‘neutral’ from ‘bearish ’, while chatter around it stayed at ‘normal’ levels over the past day.
