BlackRock: Bitcoin ‘Unique Diversifier’ Against Geopolitical and Monetary Risks

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Veronika Rinecker is based in Germany, studied international journalism and media management. She specializes in politics and regulation, energy, blockchain, and fintech. Since 2017, she has been...

In a new whitepaper from Sept. 17 titled “Bitcoin: A Unique Diversifier,” investment giant BlackRock delves into the potential of Bitcoin (BTC) as a hedge against geopolitical and monetary risks.

Authored by Robert Mitchnick, Russell Brownback, and Samara Cohen, the report challenges traditional finance frameworks and highlights Bitcoin’s distinctive characteristics.

According to BlackRock analysts, Bitcoin’s “unique nature” makes it unsuitable for the “risk on” or “risk off” asset categorization. The report emphasizes that Bitcoin’s long-term return drivers are fundamentally uncorrelated with other portfolio returns, despite its volatility and occasional short-term co-movements with equities. The whitepaper states:

BlackRock attributes Bitcoin’s potential diversification benefits to its scarcity, decentralized nature, and global accessibility. The report notes that Bitcoin’s hard-coded supply cap and its ability to be transported worldwide at near-zero costs differentiate it from traditional currencies.

However, the report also acknowledges the risks associated with Bitcoin, including its volatility, regulatory challenges, and the uncertainty surrounding its adoption as a global payment asset. Despite these risks, BlackRock argues that Bitcoin’s unique properties can provide a valuable diversification benefit for investors.

“While Bitcoin has shown instances of short-term co-movements with equities and other ‘risk assets’, over the longer term its fundamental drivers are in many cases inverted, versus most traditional investment