Bitcoin Not a Risk Asset? BlackRock: More of a "Global Currency Alternative"Robbie Mitchnick, Head of Digital Assets at BlackRock, recently stated that calling Bitcoin a "risk asset" might be a misnomer, as its long-term drivers differ significantly from other risk assets. While Bitcoin's price movements have been closely tied to US equities in the recent past, Mitchnick believes Bitcoin behaves fundamentally differently from stocks and other risk-on assets, with long-term drivers that are "very different" and even "opposite" in some cases from other risk-on assets
Bitcoin Not a Risk Asset? BlackRock: More of a "Global Currency Alternative"
Robbie Mitchnick, Head of Digital Assets at BlackRock, recently stated that calling Bitcoin a "risk asset" might be a misnomer, as its long-term drivers differ significantly from other risk assets. While Bitcoin's price movements have been closely tied to US equities in the recent past, Mitchnick believes Bitcoin behaves fundamentally differently from stocks and other risk-on assets, with long-term drivers that are "very different" and even "opposite" in some cases from other risk-on assets.
Mitchnick explains that some cryptocurrency research publications and articles consider Bitcoin a risk asset and, consequently, a risk-on asset, to be traded like stocks. However, he argues this view ignores Bitcoin's essence. He adds that Bitcoin does not carry the risks typically associated with other risk-on assets, such as:
- Insensitivity to Country-Specific Risk: Being decentralized, Bitcoin is not influenced by country-specific risks.
- No Counterparty Risk: Bitcoin transactions are peer-to-peer, eliminating counterparty risk.
- Global Nature: Bitcoin is a global asset, usable anywhere.
- Scarcity: Bitcoin's limited total supply and fixed issuance rate contribute to its scarcity value.
Mitchnick believes these characteristics make Bitcoin a compelling alternative for investors concerned about currency printing risks, currency devaluation, and political and fiscal sustainability challenges. He further highlights that Bitcoin's attributes are fundamentally different from other risk-on assets, which is why calling it a risk-on asset only confuses investors.
Mitchnick also emphasizes that, like gold, Bitcoin shows no long-term correlation with US equities. While correlations can spike in the short term, on average, it's "very close to zero," similar to the pattern followed by gold. He further notes that only three or four things truly impact Bitcoin's price during a year, and journalists instinctively connect Bitcoin price fluctuations to unemployment, the stock market, or manufacturing. However, these events are "not correlated to Bitcoin."
Mitchnick believes Bitcoin is more of an emerging global currency alternative, a scarce, global, decentralized, and non-sovereign asset. It provides an investment option free from country-specific risks and counterparty risk, making it appealing to investors seeking a safe-haven asset.
Despite BlackRock's operation of exchange-traded funds (ETFs) investing in Bitcoin and Ethereum, Mitchnick says that while many investors view Bitcoin as "digital gold," many institutional clients are "less clear" on the narrative for Ethereum. Ethereum is used for various applications on the Ethereum blockchain within the crypto world. Bitcoin is up 49% year-to-date, while Ethereum has gained 15%, largely boosted by ETF approvals earlier this year for holdings in both tokens.
BlackRock's views spark discussions around Bitcoin investment, offering investors a new perspective on understanding Bitcoin's true value beyond being just a risk asset its potential as a global currency alternative.
Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])
