BlackRock: Calling Bitcoin a "risk-on" asset may be mischaracterizedDespite Bitcoin's recent correlation with US stock prices, Robbie Mitchnick, Head of Digital Assets at BlackRock, argues that calling the cryptocurrency a "risk-on" asset might be a misnomer. Stocks, commodities, and high-yield bonds are typically considered risk-on assets because they generally perform well during periods of market optimism and economic expansion
BlackRock: Calling Bitcoin a "risk-on" asset may be mischaracterized
Despite Bitcoin's recent correlation with US stock prices, Robbie Mitchnick, Head of Digital Assets at BlackRock, argues that calling the cryptocurrency a "risk-on" asset might be a misnomer. Stocks, commodities, and high-yield bonds are typically considered risk-on assets because they generally perform well during periods of market optimism and economic expansion. Conversely, assets like gold tend to be more favored by investors during times of uncertainty.
"Gold presents many of the same patterns," Mitchnick of BlackRock said in an interview. "While there's a correlation to equities for a period of time, it's close to zero over the long term." He pointed out that Bitcoin is free from any country or government control and is scarce and decentralized. "When we think about Bitcoin, the first thing we think of is a nascent, global alternative monetary system," Mitchnick said. "Scarce, global, decentralized, non-sovereign asset. And it's not exposed to any specific country risk, nor counterparty risk."
Robbie Mitchnick, Head of Digital Assets at BlackRock, also touched upon bitcoin and ethereum differences while discussing cryptocurrency ETF custody, SEC approval of IBIT options listing on Nasdaq, cryptocurrency stock correlation, and ether ETF. BlackRock, which operates exchange traded funds (ETFs) that invest in both bitcoin and ether, said that while many investors view bitcoin as digital gold a safe haven during times of stress the narrative for ethereum is "a little less clear" for many institutional clients.
Bitcoin is up 49% year-to-date, while ether has gained 15%, driven largely by the approval of ETFs holding the two coins earlier this year. Mitchnick believes that Bitcoin's non-sovereign nature and scarcity make it more akin to a store of value than a traditional risk-on asset. He stressed that Bitcoin represents a novel global monetary alternative with unique risk and return characteristics that need to be assessed independently.
Mitchnick's viewpoint brings a fresh perspective to the cryptocurrency space, particularly in light of investor perceptions of Bitcoin as digital gold. This perspective also reflects the growing institutional interest in cryptocurrencies and the deepening understanding of digital assets in the market. As the cryptocurrency market continues to evolve, the classification of these assets and the recognition of their risk and return characteristics will become clearer.
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