On September 18, BlackRock released the report "Bitcoin: A Unique Diversifier", which stated that Bitcoin is clearly a "risky" asset in isolation due to its high volatility. However, most of the risks and potential return drivers facing Bitcoin are fundamentally different from traditional "risky" assets, which makes it unsuitable for most traditional financial frameworks - including the "risk-on" and "risk-off" frameworks adopted by some macro commentators.
The nature of Bitcoin as a scarce, non-sovereign, decentralized global asset leads some investors to view it as a safe option to turn to during periods of fear and certain geopolitical disruptive events. In the long run, Bitcoin's adoption trajectory is driven by strong concerns about global monetary stability, geopolitical stability, U.S. fiscal sustainability, and U.S. political stability. This is contrary to the relationship that is often attributed to traditional "risk assets" with such forces.
Bitcoin's long-term performance shows low correlation with stocks and bonds, which makes it attractive for diversification. Although in the short term, Bitcoin's price movements occasionally move in sync with traditional risk assets, these are considered temporary phenomena. The report's conclusions once again emphasize that Bitcoin's unique characteristics may make it a hedge against risks that traditional assets cannot cope with, especially in the face of increased geopolitical and economic uncertainty.
