BlackRock is holding its long-term investment case for Bitcoin, even after the token fell more than 50% from October 2025 highs to mid-2026 lows. The asset manager blames 'idiosyncratic deleveraging and flow dynamics' rather than a fundamental shift in the cryptocurrency's trajectory. In an updated analysis, BlackRock argues that a measured allocation could still improve a traditional 60/40 portfolio.
Why the numbers still work
The firm's trailing 10-year analysis found that a 1-2% Bitcoin allocation can improve risk-adjusted returns in a standard equity-bond mix. BlackRock calls that measured stake 'compelling' as a strategic diversifier. The sell-off, it says, hasn't changed the long-term math.
Bitcoin's dual personality
During the drawdown, Bitcoin showed two faces. It acted as a haven after the US-Iran conflict, but it tracked risk assets during deleveraging episodes like February 2026. BlackRock points to positioning as the culprit: when Bitcoin rose above $120,000 in October 2025, futures open interest exceeded $90 billion, much of it in leveraged perpetuals on offshore exchanges. That crowded trade unwound violently once China tariff headlines hit.
The flow picture
Spot Bitcoin ETPs pulled in a record $60 billion from January 2024 through October 2025. Then came outflows of more than $5 billion as investors rotated into AI-themed products, which absorbed $30 billion in the same stretch. Concerns about the balance sheets of digital-asset treasury companies added pressure. BlackRock sees these as cyclical flow shifts, not a rejection of Bitcoin's institutional adoption.
Correlation, over time
Over longer stretches, Bitcoin stays a low-correlation asset. BlackRock notes that every developed-market currency has lost more than 99% of its value against gold over the past century, which supports the case for a monetary alternative. Volatility has trended down as derivatives and ETPs matured, though leveraged perps have partly reversed that trend in the last year. The heavy deleveraging since October could push correlations with risk assets lower again, the firm says.
That's the bet: the shakeout clears out the leverage, and Bitcoin returns to its role as a diversifier. Whether the flows follow is the open question.
