Bitcoin is 'risky,' but not a risk-on asset: BlackRock strategist
Bitcoin (BTC-USD) and other crypto-related assets have rallied following President-elect Donald Trump's win as the second Trump administration is expected to be crypto-friendly. BlackRock head of digital assets Robbie Mitchnick joins Julie Hyman and Josh Lipton on Market Domination Overtime to discuss his perspective on the crypto space and the "critical" distinction that bitcoin is a risky asset, not a risk-on asset. "I think obviously the election and the sort of confidence and optimism that the market has had coming out of that for bitcoin and crypto as a part of it. I also think, frankly, 2024 was probably a tough year for bitcoin [excluding] the ETFs happening," Mitchnick explains, "because you had the confluence of higher interest rates for longer than was expected, you had four bankruptcy liquidations that were a decade in the making that had been sort of constant selling pressure in the market. That was sort of offset by the new access that the ETFs had created." Mitchnick believes there to be a new "fundamental catalyst" for crypto assets in this post-election rally. He explains, "Investors of all stripes are trying to figure out how to think about valuation, how to price in different catalysts, different risks, etc. And I don't think that's particularly well understood at all by a lot of the market today. That's why we think about our role at BlackRock and how we think about it. It's very much investor education focused around [iShares Bitcoin Trust ETF] IBIT (IBIT), around bitcoin, around these products, because there is, I think, a gap in understanding of how to think about different developments, how to think about macroeconomic interplay, how to think about bitcoin in a portfolio." He goes on to explain there's "a kind of misconception... perpetuated by a lot of crypto research" labeling bitcoin to be a risk-on asset. But, Mitchnick states that it's not: "Bitcoin is very clearly a risky asset. It's volatile. It's relatively new and unproven. Still, for a long time, it's faced regulatory uncertainty. But that's a different concept from being risk-on, which implies that you're supposed to correlate and go up and down with equities. Fundamentally, the risks and return drivers of bitcoin are very different from what they are of equities. And most other so-called risk-on assets." To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. This post was written by Naomi Buchanan.
