Following the successful launch of a Bitcoin spot ETF, BlackRock recently released a detailed report outlining Bitcoin’s unique position among the major asset classes.
The current market value of Bitcoin exceeds US$1 trillion, and the spot Bitcoin ETF launched by BlackRock earlier this year quickly accumulated US$21 billion in assets under management due to strong market interest, making it one of the most successful ETFs in history. .
In the latest white paper released by BlackRock, the institution explains why Bitcoin can become a "unique risk diversification tool" and why many investors have difficulty comparing it with "traditional assets" when analyzing Bitcoin. Make a comparison. The report noted that Bitcoin’s correlation with U.S. stocks or U.S. interest rates tends to be short-lived.
“Bitcoin’s unique characteristics do not fit into the definition of a traditional financial framework. Although Bitcoin has had short-term fluctuations with stocks, especially when U.S. dollar real interest rates have changed sharply, its long-term correlation with stocks and bonds has been low. And the historical returns are much higher than other major asset classes.”
Additionally, BlackRock highlighted a key point when dissecting Bitcoin’s performance and the difficulty of predicting its price:
“Bitcoin’s correlation with the macro factors that affect most traditional asset classes is extremely low.”
The Wall Street giant noted that while Bitcoin remains a "high-risk" asset class, it has outperformed all other major asset classes in seven of the past ten years. But at the same time, in the other three years, Bitcoin performed the worst. BlackRock explained in the report:
“These fluctuations in Bitcoin’s price partly reflect the evolution over time of its prospects for widespread adoption as a global currency alternative,”
Because Bitcoin appears to be decoupled from global macroeconomic factors, for some it can act as a safe haven amid geopolitical tensions. The report also noted that Bitcoin could provide protection against a scenario in which the U.S. federal deficit could lead to a weakening of the U.S. dollar.
However, BlackRock emphasized that Bitcoin is still a high-risk asset, but its sources of risk are different from traditional investment assets. Therefore, the traditional definition framework of "risk assets" and "safe haven assets" does not apply to Bitcoin. Finally, BlackRock concluded:
“As the global investment community grapples with rising geopolitical tensions, concerns over U.S. debt and deficit conditions, and increasing global political instability, Bitcoin may be viewed as an increasingly unique diversified investment vehicle to address Investors face some of the fiscal, currency and geopolitical risk factors that may face other issues in their portfolios."
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