The price of Bitcoin has taken a hit this year, but its investment thesis hasn’t changed, BlackRock has said.
Bitcoin’s price is down nearly 50% since its October record. But investors shouldn’t worry, the world’s largest asset manager has said, and the cryptocurrency still plays a role as “a global monetary alternative.”
In a report Monday, Robert Mitchnick, global head of digital assets at the firm, said that the ongoing rise in U.S. and global government debt and deficits hasn’t slowed.
BlackRock has argued alongside other Bitcoin proponents that the oldest and biggest cryptocurrency can be a hedge against governments printing money.
Noting that there was seemingly no way governments could not debase their currencies, the report added: “With no credible path for consolidation on the horizon, these fiscal dynamics reinforce the strategic case for assets with supply constraints beyond the discretion of central banks, governed by geology in the case of gold and mathematics and code in the case of bitcoin.”
The Wall Street titan added that bitcoin’s price has consistently been volatile during its 17-year history, but investors shouldn’t be put off.
“And while bitcoin remains inherently volatile, its volatility has trended lower over the past decade as market structure has matured, supported by the growth of derivatives markets and the expansion of and exchange-traded products,” the report noted.
The report continued by saying that the asset still deserves a spot in investors’ portfolios for uncorrelated returns.
Wall Street’s top regulator, the SEC, approved BlackRock’s iShares Bitcoin Trust in January 2024.
Of all the Bitcoin ETFs, BlackRock’s product has been the most successful, attracting the most investment and trading volume.
BlackRock has previously said that Bitcoin is in an asset class of its own, and that investors are buying it to hedge against any potential debt crises.
Bitcoin’s price recently stood at $64,713, up by nearly 2% over the past day but flat over a 30-day period. Year-to-date, the asset is down 27% and has shed nearly half of its value since its all-time high last year of $126,080.