Could Bitcoin benefit from a potential recession in the US? BlackRock, the world’s largest asset manager, sees significant opportunities for Bitcoin in an economic crisis.
- Bitcoin as a crisis winner: Robbie Mitchnick of BlackRock emphasizes that conditions such as lower interest rates, higher government spending, and monetary stimulus measures could favor Bitcoin in a US recession.
- Uncorrelated asset: Despite market uncertainties, BlackRock sees Bitcoin as a long-term, uncorrelated asset that offers opportunities even in economically turbulent times.
- While BlackRock is optimistic about Bitcoin’s future and is driving institutional adoption through the iShares Bitcoin Trust ETF, other players warn of the risks of a dramatic US economic downturn and the existing correlation with traditional markets.
Bitcoin as a Winner in a Recession
In an interview with Yahoo Finance on March 19, Robbie Mitchnick, head of digital assets at BlackRock, stated that Bitcoin could be a big winner in a US recession. He said (source):
“I don’t know if there will be a recession or not, but a recession would be a significant catalyst for Bitcoin.”
According to Mitchnick, Bitcoin is driven by factors such as increased government spending, rising deficits, lower interest rates, and monetary stimulus measures—conditions that typically occur in recessions.
He further emphasized that Bitcoin could also benefit from fears of social unrest, which often occur in recessions.
The BlackRock executive emphasized, however, that the market does not yet fully understand Bitcoin, and many continue to view it as a risk-on asset—that is, an asset that suffers in times of economic crisis, similar to stocks, commodities, or high-yield bonds.
He argues, however, that Bitcoin could be uncorrelated or even inverse to certain risk factors in the long term, making it an attractive option in times of crisis.
BlackRock and the Bitcoin ETF
BlackRock is playing a key role in the institutional adoption of Bitcoin, particularly through its iShares Bitcoin Trust ETF (IBIT), which holds the most net assets of any Bitcoin investment product at $48.7 billion.
The ETF reached the $10 billion mark in just two months – a milestone that took the first gold ETF two years to reach. Mitchnick isn’t concerned about the recent defaults on most Bitcoin ETFs, as these have primarily come from hedge funds unwinding arbitrage trades between spot and futures markets.
Long-term investors who hold Bitcoin, he says, remain unfazed by the current economic challenges and even view the market correction as a buying opportunity.
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