BlackRock has published an updated look at bitcoin’s investment case following the asset’s roughly 50% slide from its October 2025 peak above $124,000 to cycle lows below $60,000 in June 2026.
A positioning problem, not a fundamentals problem
The report, authored by digital assets heads Robert Mitchnick and Will Su, pins the drawdown on leverage rather than any deterioration in bitcoin’s underlying story.
Futures open interest had swelled past $90 billion by early October, with roughly 80% of that sitting in offshore perpetual futures offering up to 125x leverage.
When the U.S. announced fresh China tariffs on Oct. 10, 2025, bitcoin’s open interest fell $20 billion in a single day, the largest drop on record.
The authors wrote:
“We view bitcoin’s ~50% pullback from October 2025 highs as a positioning correction rather than a change in its investment case.”
Flows rotated into AI
Spot bitcoin ETPs pulled in $60 billion between January 2024 and October 2025, but have since bled roughly $5 billion while AI-themed funds absorbed $46 billion.
BlackRock described the shift plainly:
“In our view, the rotation into AI-exposed equities likely competed for capital and became a net drag on investors’ bitcoin allocations.”
Sentiment also soured on digital asset treasuries after Strategy, which now holds around 4% of circulating supply, disclosed a token sale of 32 BTC in June 2026 — a move that preceded a 20% price drop.
BlackRock flagged additional whale supply, including MARA’s $1.1 billion sale in March 2026 and a $1.3 billion IBIT block trade in May.
Correlation and volatility
Bitcoin’s 10-year correlation to the S&P 500 sits at 0.18, below commodities, emerging market equities, and high-yield bonds.
On the recent spikes, the report noted:
“We regard these spikes as episodic rather than structural.”
Trailing 12-month realized volatility has fallen to 40%, down from repeated readings above 100% a decade ago.
BlackRock also revisited its debasement argument:
“Every fiat currency issued by the dominant world economies at the turn of the 20th century has lost more than 99% of its value against gold.”
The allocation math
A rolling 10-year study found a 2% bitcoin sleeve lifted a 60/40 portfolio’s Sharpe ratio from 0.81 to 0.96, with max drawdown barely changed at -20.9% versus -20.3%.
“We continue to believe that long-horizon investors are likely to increasingly consider a measured allocation to bitcoin as a strategic complement to their conventional holdings.”
