According to BlockBeats, on September 18, BlackRock released the report “Bitcoin: A Unique Diversifier”, which stated that Bitcoin is clearly a “risky” asset in isolation due to its high volatility. However, most of the risks and potential return drivers faced by Bitcoin are fundamentally different from traditional “risky” assets, which makes it unsuitable for most traditional financial frameworks – including the “risk-on” and “risk-off” frameworks adopted by some macro commentators.
Bitcoin’s nature as a scarce, non-sovereign, decentralized global asset leads some investors to view it as a safe haven option during times of fear and certain geopolitically disruptive events. Bitcoin’s adoption trajectory over the long term is driven by strong concerns about global monetary stability, geopolitical stability, U.S. fiscal sustainability, and U.S. political stability. This is the opposite of the relationship typically attributed to traditional “risk assets” with such forces.
Bitcoin’s long-term performance shows low correlation with stocks and bonds, making it attractive for diversification. Although in the short term, Bitcoin’s price movements occasionally move in sync with traditional risk assets, these are considered temporary phenomena. The report’s conclusions reiterate that Bitcoin’s unique characteristics may make it a hedging tool for risks that traditional assets cannot cope with, especially in the context of increased geopolitical and economic uncertainty.
