BlackRock said Bitcoin’s more than 50% decline from its all-time highs in October 2025 to its mid-2026 lows has not changed its long-term investment case.
In its latest report, the asset manager attributed the sell-off to “idiosyncratic deleveraging and flow dynamics” rather than a structural shift in the cryptocurrency’s trajectory.
Long-Term Case Remains Intact
BlackRock said that Bitcoin’s core role as an emerging global monetary alternative and a unique portfolio diversifier remains unchanged. During the sell-off, BTC showed a “dual personality,” at times acting as a haven asset, especially after the US-Iran conflict, while also showing high correlations with risk assets during deleveraging episodes such as February 2026.
According to BlackRock, this was shaped by investors seeking a hedge against macro risks and by market positioning. The firm said Bitcoin’s correlation with risk assets tends to rise when speculative positioning becomes high and is followed by deleveraging. Positioning reached extreme levels as the crypto rose above $120,000 last October, during which futures open interest exceeded $90 billion and was heavily concentrated in leveraged perpetual futures on offshore exchanges.
A macro-driven risk-off catalyst, including China tariff headlines, then ended up triggering deleveraging across precious metals as well as crypto markets. Liquidation waves pushed BTC below $60,000 by June 2026. Weaker institutional inflows were yet another factor that slowed Bitcoin’s price recovery. Spot BTC ETPs had attracted a record $60 billion in inflows from their January 2024 launch through October 2025, but later saw more than $5 billion in outflows as investor attention pivoted toward AI-themed products, which attracted $30 billion during the same period.
Concerns about the balance sheet sustainability of digital asset treasury entities further weighed on sentiment. But BlackRock views these developments as cyclical flow dynamics and not as evidence of a structural change in BTC’s long-term institutional adoption.
BlackRock Endorses Modest BTC Allocation
Over longer periods, the firm said Bitcoin has remained a low-correlation asset, supported by its potential role as a global monetary alternative and a hedge against fiat debasement. BlackRock also explained that every developed-market currency has lost more than 99% of its value against gold over the past century. Its portfolio analysis found that the crypto asset has offered positively skewed returns and low correlation with traditional risk assets, including equities, over extended periods.
The heavy deleveraging since last October could lead to lower correlations between Bitcoin and risk assets, according to BlackRock. At the same time, its volatility has trended down over the past decade as the market structure has matured, with the expansion of derivatives and ETPs helping drive that decline.
However, the growth of leveraged perpetual futures over the past year has partly offset that trend. BlackRock’s updated trailing 10-year analysis found that a 1%-2% BTC allocation could have improved risk-adjusted returns in a traditional 60/40 portfolio, and it said a measured allocation could remain “compelling” as a strategic diversifier for long-term portfolio construction.
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