BlackRock, the largest asset manager in the world, has published a comprehensive report on Bitcoin.

Bitcoin: A Unique Asset for Diversification

In their report, BlackRock executives Samara Cohen, Robert Mitchnick, and Russell Brownback highlighted that Bitcoin is a unique asset for diversification purposes. The report is significant due to the authors’ positions within BlackRock: Cohen as Chief Investment Officer of ETF and index investments, Mitchnick as head of assets, and Brownback overseeing global positioning for fixed income.

Bitcoin’s Limited Supply

One of the key points in the report is that Bitcoin has a limited supply, capped at 21 million coins. This contrasts sharply with fiat currencies like the U.S. dollar, which have no supply cap. For instance, the Federal Reserve has the authority to print more dollars, as seen during its last quantitative easing program when its balance sheet increased from under $5 trillion to $8.9 trillion.

Ease of Cross-Border Transactions

BlackRock also noted that Bitcoin facilitates easier cross-border money transfers. However, it’s important to mention that Bitcoin transactions can be more expensive than fiat currency transfers. This has led to the rise of stablecoins like Tether and USD Coin, which are now popular for cross-border payments.

Decentralization

Another critical aspect pointed out by BlackRock is that Bitcoin operates as a truly decentralized global monetary system, free from control by any central authority.

Bitcoin is uncorrelated with stocks and gold

According to BlackRock, Bitcoin is a highly uncorrelated asset with a robust performance history. Since its inception, it has appreciated by over 807,000 times. During periods of global risk, Bitcoin often outperforms traditional assets like the S&P 500 and gold. For example, during the U.S.-Iran tensions in January 2020, Bitcoin’s 60-day return was 20%, while the S&P 500 fell by 7% and gold rose by 6%. Similarly, after the Covid-19 outbreak in March 2020, Bitcoin rose by 21%, compared to the S&P 500’s 2% and gold’s 3% increases.

Additionally, BlackRock believes Bitcoin is a valuable asset amid rising U.S. public debt. Data from the National Debt Clock indicates that the U.S. has over $35.2 trillion in debt, with $1 trillion spent annually to service it. An opinion piece in the Wall Street Journal has warned of an impending national debt crisis.

Bitcoin has also outperformed traditional assets during significant events like Russia’s invasion of Ukraine and the yen carry trade unwinding.

BlackRock’s Influence

BlackRock’s views on Bitcoin are crucial given its substantial role in the global economy. The company’s latest financial results reveal it manages over $10.7 trillion in assets, representing 41% of the American gross domestic product. BlackRock is also a significant player in the spot Bitcoin ETF industry, with over $21 billion in assets.

Bitcoin’s Current Price Movement

BlackRock’s report comes as Bitcoin remains stuck around the $60,000 mark, with traders anticipating the Federal Reserve’s next move. Bitcoin is currently consolidating at the 50-day and 200-day moving averages and has shown a series of lower lows and lower highs. The short-term outlook for Bitcoin is neutral. A bullish trend will be confirmed if it breaks above the upper descending trendline, while a further decline could occur if it falls below $52,000.

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