BlackRock’s Crypto Director: Bitcoin Isn’t a ‘Risk-On’ Asset

When BlackRock makes a move, the market listens. That was clear when they filed for a Spot Bitcoin ETF in 2023. While other companies tried for years, it seemed BlackRock’s request sped through the process. Now, they’re offering more insight into Bitcoin, and this time, it’s about how we’ve been categorizing it.

Is Bitcoin Really a Risk-On Asset?

Robbie Mitchnick from BlackRock got right to the point in a recent appearance on Bloomberg, stating that Bitcoin has been wrongly labeled as a “risk-on” asset. But what does that mean? A risk-on asset typically does well when people are willing to take on more risk. This happens when the economy is in good shape, and interest rates are low. Investors, looking for bigger returns, often turn to these types of assets.

But Mitchnick explained that Bitcoin doesn’t fit into this category. “When you look at Bitcoin fundamentally, the long-term drivers of BTC are very different from those for stocks and other risk assets. In some cases, the situation is even completely opposite,” Mitchnick told Bloomberg.

BlackRock recently published a Bitcoin white paper, calling Bitcoin a “unique diversifier” and highlighting its potential to act as a hedge against things like monetary instability and geopolitical risks.

“When we think about Bitcoin, we primarily see it as an emerging new form of global money,” said the BlackRock executive.

Does Bitcoin Even Fit in a Category?

Trying to put Bitcoin in a specific box has always been tricky. On one hand, Bitcoin often moves in sync with the U.S. tech market, showing a high correlation. But at the same time, as Mitchnick and BlackRock point out, Bitcoin doesn’t really behave like a typical risk asset.

Mitchnick explained further. Bitcoin is a scarce, global, decentralized, and non-sovereign asset that is not tied to any country and carries no third-party risks, according to him. It confuses investors when you label such an asset as risk-on based on these characteristics.

Logically, with its decentralized nature and limited supply, Bitcoin seems like it should act as a “risk-off” asset—a safe place when markets get shaky. However, so far, it hasn’t behaved that way. Bitcoin still tends to rise and fall with other risk assets.

So, is Bitcoin a risk-off asset waiting to be recognized? Or are people still betting on its potential to take on that role? Right now, it’s still acting like a tech stock, but the future may hold something different.