A new viewpoint on the flagship cryptocurrency has been offered by BlackRock. Remarkably, according to Robert Mitchnick, head of BlackRock’s crypto division, Bitcoin is mistakenly classified as a risky asset on the grounds of its frequent correlation with the stock market. The analyst insists that in fact, Bitcoin is a risk-free asset.
The category of risk-free assets includes financial instruments that demonstrate steady returns under benign market conditions. Commonly, these are shares of high-tech companies, certain commodities, and most digital currencies.
In contrast, safe-haven assets are those that perform well during periods of market turbulence or economic downturns. These include gold, silver, government bonds, and the US dollar.
From a fundamental analysis standpoint, the long-term growth drivers of Bitcoin differ significantly from those of stocks and other risky assets, Mitchnick says.
The analyst points out that the narrative around Bitcoin and its nickname of digital gold were created by the crypto community itself. We primarily consider Bitcoin an emerging global alternative monetary asset. It is a scarce, global, decentralized non-sovereign asset, not tied to any particular country, and free from traditional counterparty risk, Mitchnick asserts.
However, exactly these features of Bitcoin confuse investors, who mistakenly perceive them as risk factors, the expert emphasizes.
Importantly, BlackRock experts described the leading cryptocurrency in their report as a "unique diversifier" and a tool for hedging global risks.
