Bitcoin has been mislabelled as a “risk-on” asset, according to BlackRock’s head of digital assets, Robbie Mitchnick.
“What’s happened a little bit in the crypto industry is a bit of an own goal,” said Mitchnick in an interview with Bloomberg on Sept. 24.
“Some of the crypto research type publications and daily commentaries have taken the fact that Bitcoin, which is obviously a risky asset and extrapolated it to say therefore it is a risk-on asset and should trade like equities,” he said.
Robbie Mitchnick suggests Bitcoin is closer to a risk-off asset. Source: Bloomberg
“When you look at it fundamentally, the drivers of Bitcoin long term are very different from what’s going to drive equities and other so-called risk assets, and in some cases, they may actually even be inverted,” Mitchnick said.
In BlackRock’s recently released Bitcoin white paper, the asset manager labeled Bitcoin (BTC) as a “unique diversifier,” highlighting its potential to act as a hedge against monetary and geopolitical risks.
“When we think about Bitcoin, we think of it primarily as an emerging global money alternative, right,” Mitchnick said. “It is a scarce, global, decentralized non-sovereign asset and it is an asset which has no country-specific risk, has no traditional counterparty risk.”
“It confuses investors when people talk about it as risk-on because based on the properties I just described, you would think of it as risk-off.”
A risk-on asset typically refers to assets that maximize returns during favorable economic conditions, including equities such as tech and growth stocks, certain commodities, and many cryptocurrencies.
On the other hand, risk-off assets are a category of investments that perform well during periods of heightened market uncertainty or economic downturns, such as gold, silver, government bonds, and the United States dollar.
Bitcoin outperformed the S&P 500 during major geopolitical events. Source: BlackRock
“The reality is, there’s probably two or three things a year that happen typically that actually impact the fundamental value of Bitcoin,” he added.
BlackRock currently offers a spot Bitcoin exchange-traded fund (ETF) called iShares Bitcoin Trust (IBIT), which allows investors to invest directly in Bitcoin through a regulated investment vehicle.
Mitchnick played down a recent amendment to its Bitcoin ETF that requires withdrawals within 12 hours from Coinbase, the ETF’s custodian.
“Frankly, nothing of significance has changed here,” said Mitchnick. “What we do constantly with Coinbase, just like all our other service providers, is there is an operational fine-tuning and optimization of models as you get into [...] these crypto ETFs. So this is really just a normal course update as we refine things,” he said.
PlanB dreams up a scenario that would see Bitcoin hit $1 million
A recent commotion over Bitcoin and BlackRock’s ETF comes amid a new dream “scenario” from PlanB, a crypto analyst and creator of the controversial Bitcoin stock-to-flow model.
The prediction shows Bitcoin clearing an all-time high of more than $1 million by the end of 2025.
In a Sept. 24 post on X, PlanB proposed a scenario by which Trump would win the election in November, ending the “war on crypto” and pushing Bitcoin to an all-time high of $100,000.
Related: BlackRock Bitcoin ETF demands 12-hour BTC withdrawals from Coinbase
According to PlanB’s theory, by January 2025, crypto companies would return to the US, pumping Bitcoin to $200,000.
In April, Trump would begin building a strategic Bitcoin reserve, causing the currency to hit $400,000, just before “face-melting FOMO” between July and December that would drive Bitcoin to $1 million.
Most of the commenters replying to the post suggested it may be a tad too “optimistic.”
“If all of this will be true, I will run naked in the streets,” said crypto trader Mr. Moontastic.
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