Bitcoin has ‘largely purged’ froth that preceded 50% drop from $126K: BlackRock
Bitcoin maintained its appeal as a diversification investment despite dropping more than 50% from all-time high, a BlackRock report stated.
Bitcoin, despite falling more than 50% from its all-time high of $126,200, has maintained its status as a diversification investment, according to a BlackRock report. The drop was viewed as a "positioning correction" rather than a change in Bitcoin's investment case, as stated by BlackRock. The asset manager noted that falling outflows from Bitcoin ETFs and slowing demand for digital asset treasuries contributed to the correction.
BlackRock predicts that the correlation between Bitcoin and risk assets will normalize, consistent with Bitcoin's long-term record as a low-correlation diversifier. The report highlights that Bitcoin's performance has often outperformed other assets during periods of disruption, such as the 2020 US presidential election and the recent conflict between the U.S. and Iran.
Bitcoin's volatility is higher than gold and the S&P 500, and its correlation with the S&P 500 is currently 0.18, indicating a less close relationship compared to gold.
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