BlackRock Sees No Change in Bitcoin's Investment Case

BlackRock's research suggests that Bitcoin's investment case remains unchanged despite its recent decline. The report attributes the drop in value to excessive leverage, slowing institutional inflows, and selling from large holders.

The study points out that speculative positioning reached extreme levels in October 2025, with Bitcoin futures open interest exceeding $90 billion. A liquidation cascade on Oct. 10 wiped around $20 billion from Bitcoin open interest in a single day, leading to further waves of liquidations in February and June.

BlackRock's research argues that these episodes explain Bitcoin's temporarily elevated correlation with stocks. When leverage becomes excessive, forced liquidations can make BTC behave more like a conventional risk asset. At other times, Bitcoin has displayed its ability as a macro hedge, including during the aftermath of the U.S.-Iran conflict.

The report also notes that institutional demand weakened after October as investor attention increasingly shifted toward artificial intelligence. AI-themed funds attracted more than $46 billion after October compared to $5 billion in aggregate outflows in U.S. spot Bitcoin ETPs.

Despite these developments, BlackRock's research concludes that correction represents a 'positioning correction rather than a change in its investment case.' The report suggests allocating just 1% to 2% of a traditional 60/40 portfolio to Bitcoin would have improved risk-adjusted returns while maintaining comparable portfolio risk characteristics.