Is Bitcoin a "risk asset" or a "safe haven asset"? Analysts at BlackRock, the world's largest asset manager, believe it's neither.
BlackRock mentioned in a briefing document on Wednesday that its clients generally view Bitcoin as "an asset that can hedge the risk of the U.S. debt crisis" and that Bitcoin affects the macro variables of other asset classes and "fundamental exposure." Very small".
BlackRock analysts noted that some of Bitcoin’s defining attributes are its “limited supply,” its “global circulation” nature, and its “ease of cross-border transfers.”
Growing concerns at home and abroad about the U.S. federal deficit and debt have increased the appeal of (Bitcoin) as an alternative reserve asset that can be used as a hedge against "potential future events that impact the U.S. dollar."
Based on our experience interacting with clients to date, this explains a large part of the recent expansion of institutional interest in Bitcoin.
The United States currently has government debt of $35 trillion and an official annual budget deficit of $2 trillion. Republican Senator Cynthia Lummis and former President Trump have proposed establishing a strategic reserve of 1 million Bitcoins to help clear the United States' debt.
BlackRock's report describes Bitcoin as a "non-sovereign currency alternative" that is broadly immune to banking system crises, sovereign debt crises, currency devaluations and geopolitical disruptions. In the long term, they believe Bitcoin adoption will increase as concerns grow over these crisis events.
This analysis is consistent with Bitcoin being described as a "safe haven asset without correlation" for many years.
Bitcoin advocates have argued for years that in times of uncertainty, as the dollar weakens, investors will flock to thinly supplied assets like Bitcoin. But in fact, Bitcoin has not performed like this in recent years. Since the market crash caused by the outbreak of the new crown epidemic in March 2020, Bitcoin's trading has almost synchronized with US stocks, especially with technology stocks.
As for "geopolitical disruption", after Russia invaded Ukraine in 2022, Bitcoin fell by 6% in 10 days, but it rose by 15% in the next 60 days.
BlackRock attributes these contradictions to the fact that Bitcoin is still an immature asset, but during panics, Bitcoin is more "sellable" than illiquid assets such as real estate.
BlackRock said that for now, Bitcoin remains a "risky" asset due to changing regulatory factors and because it is an emerging technology.
Analysts at BlackRock said that a structure that is simply divided into "risk assets" and "safe haven assets" lacks overall useful and detailed distinctions.
〈Why are BlackRock clients buying Bitcoin? Analyst: As a safe haven from the "U.S. debt crisis" This article was first published on "Block Guest".
