BlackRock Sticks to Long-Term Bitcoin Thesis Despite 50%+ Price Drop

BlackRock has maintained its long-term investment case for Bitcoin despite a significant drop in price. The asset manager attributed the decline to market positioning and deteriorating capital flows rather than a change in its underlying thesis.

The major factor in the decline was leverage, according to BlackRock. Crypto futures open interest had climbed above $90 billion, with roughly 80% concentrated in perpetual futures outside the CME. This left the market vulnerable when a China tariff shock triggered an initial wave of deleveraging, followed by further forced liquidations in February and June.

Selling pressure also included a small strategy test sale and disposals by large holders and miners. Additionally, slowing demand from digital asset treasury companies and growing skepticism about continued DAT accumulation weighed on the market.

However, BlackRock continues to view a small Bitcoin allocation as a potential source of portfolio diversification and a possible hedge against the erosion of fiat currencies' purchasing power.