The 60-day return for Bitcoin outperformed gold and US stocks after a flurry of events. BlackRock claims that the 'risk-on' and 'risk-off' narratives regarding cryptocurrency are very simple.
Bitcoin has long been pitched as digital gold, an alternative reserve asset and a flight to safety for investors during major geopolitical events.
Now, $10 trillion investment bank BlackRock is singing the same tune again.
“Bitcoin is seen by some investors as a 'flight to safety' in times of fear amid some of the most disruptive global events of the past five years,” the report said.
To that effect, say the authors, including Robert Michnick, BlackRock's head of digital assets, “modest allocation” involves diversifying — making multiple bets on the market instead of investing in just one asset — as a portfolio.
BlackRock attracts new investors to Bitcoin.
In January, the Securities and Exchange Commission approved 11 spot bitcoin exchange-traded funds, including an offering from investment giant IBIT. According to data from , the product has already grossed over $17 billion Farside.
Supporters of bitcoin – which now owns BlackRock – say its main selling points are that it has a finite supply, that no country controls it and that it is available worldwide.
These characteristics make bitcoin react differently than other assets like gold or the S&P 500 index, the BlackRock report said.
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Like both assets, Bitcoin initially declined during severe geopolitical crises, including the Covid outbreak in 2020 and the US regional banking crisis in 2023.
Two months after each event, Bitcoin outperformed both gold and the US benchmark.
Sixty days after the outbreak of Covid, for example, Bitcoin was up 21%, while gold and the S&P 500 were up only 3% and 2%, respectively.
Bitcoin risk increases
Make no mistake, BlackRock warns, Bitcoin is still risky.
“However, these risks are unique to Bitcoin and not exclusively shared by other investment assets,” BlackRock's authors wrote. That's why “simple 'risk-on' vs 'risk-off' frameworks lack the nuance to be broadly useful.”
At just 15 years old, bitcoin is still a highly volatile, speculative asset, says Adam McCarthy, a research analyst at crypto data firm Keiko. DL News.
“Gold is worth 15 times more than Bitcoin and is owned by major central banks,” he said.
“Until we see bitcoin rise further it would be too early to call it a flight-to-safety asset.”
Just yesterday, it behaved more like Nvidia stock than digital gold.
Bitcoin rallied after Fed Chair Jerome Powell announced the central bank would cut interest rates by half a percentage point.
In 46 days, Bitcoin will face another test: the US election.
Former President Donald Trump has emerged as a pro-crypto candidate, while Vice President Kamala Harris' position remains unclear.
Bernstein analysts say bitcoin could hit $90,000 if Trump wins. If Harris enters the White House, that could drop to $30,000.
Liam Kelly is a DeFi Correspondent DL News. Got a tip? Email him [email protected].
