Rampant speculation on crypto derivatives platforms is fueling volatility and risking bitcoin’s image as a stable hedge, says BlackRock’s digital assets chief.
What to know:
- BlackRock digital-assets chief Robert Mitchnick warned that heavy use of leverage in bitcoin derivatives is undermining the cryptocurrency’s appeal as a stable institutional portfolio hedge.Mitchnick said bitcoin’s fundamentals as a scarce, decentralized monetary asset remain strong, but its trading increasingly resembles a "levered NASDAQ," raising the bar for conservative investors to adopt it.He argued that exchange-traded funds like BlackRock’s iShares Bitcoin ETF are not the main source of volatility, pointing instead to perpetual futures platforms.
NEW YORK — While BlackRock’s iShares Bitcoin ETF (IBIT) is among themost successful product launchesin Wall Street history, the crypto market’s growing reliance on leverage could be doing long-term damage to bitcoin’sBTC$69,041.82institutional appeal, according to Robert Mitchnick, head of digital assets at BlackRock.
During a conversation with Anthony Pompliano and investor Dan Tapiero at theBitcoin Investor Weekconference in New York on Thursday, Mitchnick said that while bitcoin’s fundamentals remain strong, excessive speculation — particularly on leveraged derivatives platforms — is introducing instability that threatens the asset’s positioning as a serious portfolio hedge.
“These days where you have a tiny little thing that shouldn't have any price impact really at all — and if it does, should be small — like,for example, October 10th, some tariff-related thing, and next thing you know, [bitcoin] is down 20%,” Mitchnick said. “That’s because you get cascading liquidations and auto-deleveraging.”
While bitcoin’s long-term value proposition as a “global, scarce, decentralized monetary asset” remains intact, Mitchnick warned that the asset’s short-term trading behavior is starting to look dangerously similar to “levered NASDAQ” — a perception that may deter conservative allocators from entering the space.
“The facts are more on the side of how I characterized it,” he said, referring to bitcoin’s fundamental attributes. “But now the trading data, at least lately, looks very different, and the bar to adoption if it trades like levered NASDAQ is much, much, much higher.”
Mitchnick also pushed back on the idea that exchange-traded funds (ETFs) like IBIT are contributing tovolatility, pointing instead to perpetual futures platforms as the source of instability.
“There’s a misperception out there that it’s a bunch of hedge funds in ETFs that are creating volatility and selling; that’s not what we’re seeing,” he said. “On a week that was tumultuous, obviously, in the bitcoin market, we had 0.2% of the fund redeem. If there actually were hedge funds massively unwinding trades… you would have seen billions. We saw many billions liquidated on these levered platforms.”
Despite short-term turbulence, Mitchnick emphasized that BlackRock remains committed to digital assets as part of a broader financial transformation.
“We see ourselves as having the role of a bridge… between traditional finance and the digital asset world,” he said. “Over time, there’s certainly going to continue to be a greater role for digital assets and this technology theme in general for many of our clients.”
Read More:Bitcoin May Evolve Into Low-Beta Equity Play Reflexively, BlackRock's Mitchnik Says
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