BlackRock: The appeal of Bitcoin lies in its detachment from traditional risk and return drivers

ChainCatcher news, BlackRock has released a report titled "Bitcoin: A Unique Diversifier," which states that most of the risks and potential return drivers faced by Bitcoin differ from those of traditional "risk" assets, making 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 during times of fear and certain geopolitical disruptive events. The long-term adoption trajectory of Bitcoin is driven by strong concerns over global monetary stability, geopolitical stability, U.S. fiscal sustainability, and U.S. political stability. This contrasts with the typical relationship attributed to traditional "risk assets" and 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 align with traditional risk assets, these are considered temporary phenomena. The report concludes by reiterating that Bitcoin's unique characteristics may make it a hedge against risks that traditional assets cannot address, especially in times of heightened geopolitical and economic uncertainty.