Is Bitcoin a “risk on” or “risk off” investment? This is what BlackRock says about it
2 min readIn its latest report, the US investment company BlackRock addresses the question of whether Bitcoin is a “risk on” or “risk off” asset.
Investing in Bitcoin: A hedge against economic uncertainty?
Bitcoin has been around since 2009 – making it the first and oldest cryptocurrency on the market. If you look at the performance from then to now, it quickly becomes clear: Even though there have been repeated (sometimes severe) slumps, the crypto veteran has grown continuously. BTC is currently worth around 60,000 US dollars. But is Bitcoin really a hedge against economic uncertainty and therefore a “risk off” investment? BlackRock is looking into this.
The international investment company has taken a close look at Bitcoin in its latest report. Although significant gains and drastic losses make the coin a volatile investment – no question about it – the company nevertheless found that BTC does not follow typical market trends. As the BlackRock analysis shows, long-term performance moves away from traditional financial markets. This has enabled Bitcoin to outperform all other major asset classes in seven out of ten years – and achieve an annual return of over 100 percent.
BlackRock sees potential in long-term acceptance
But what does the success of the cryptocurrency actually depend on? According to BlackRock, geopolitical risks and currency instability could determine the future of Bitcoin. If the developments lead to greater acceptance, BTC would be sure to play an important role in the global financial system. The decentralized nature makes Bitcoin interesting for investors who are looking for alternative currencies – according to the investment company.
In addition, the interest of institutional investors is increasing. The company Cathedra Bitcoin, for example, is focusing on increasing its Bitcoin holdings. The same goes for the US company MicroStrategy. The software manufacturer is even taking on debt in order to invest even more in the cryptocurrency. For this reason, BlackRock has come to the conclusion that Bitcoin is here to stay. Only time will tell whether they are right.
