BlackRock CEO explains why Bitcoin is a safe place

The classification of Bitcoin in the financial ecosystem is highly controversial. Some analysts see it as a stable shelter and others as a risky asset.

However, Robbie Michnick, head of digital assets at BlackRock Inc., argues that bitcoin is fundamentally a risk-free asset.

A Blackrock executive talks about the basics of Bitcoin

Hedging assets such as gold and government bonds are preferred in uncertain times, providing a safe harbor when the economic outlook looks dire. Conversely, riskier assets such as stocks tend to rise when investor confidence is high. Despite its occasional correlation with the stock market, Michnick asserts that bitcoin will ultimately behave differently in the long term.

“There have been times when Bitcoin's correlation with stocks has been high and there have been times when it has been negative. “In fact, gold shows a lot of the same patterns where these temporary periods are emerging, but long-term, near zero,” Michnick said.

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Michnick explores Bitcoin's unique characteristics as a global, decentralized, non-sovereign asset. He believes that Bitcoin is not tied to the economic health or policies of any country. It is a very small asset that is free from the usual risks of currency collapse and political turmoil.

According to Michnick, for these reasons, bitcoin becomes an attractive alternative when traditional currencies decline.

BlackRock's involvement with Bitcoin highlights its risk exposure. The company's iShares Bitcoin Trust (IBIT) now holds nearly $23 billion in assets. This significant management suggests strong institutional and retail confidence in Bitcoin's stability during turbulent times.

This view of change can be seen beyond BlackRock. At the recent Barron's Advisor 100 meeting, there was a clear shift among the top financial advisors in the US.

Read more: Who will have the most Bitcoins in 2024?

Matt Hogan, chief investment officer at Bitwise, emphasized this trend, stating that 70% of summit attendees now personally own cryptocurrencies, a significant increase from just a few years ago. This significant increase reflects a broader industry trend in which advisors' personal investments come before their decisions for their clients.

As these barriers erode, incorporating bitcoin into diversified portfolios may become more formal, reinforcing its role as a risk-off asset.