In an interview with Bloomberg, Robbie Mitchnick, Head of Digital Assets, BlackRock said that he believes the crypto industry has misrepresented Bitcoin (BTC) by categorizing it incorrectly. He called it a ‘marketing problem’. He emphasized that labeling Bitcoin as a “risk-on” asset is a significant misunderstanding, comparable to scoring an “own goal” in sports.
Understanding “Risk-On” vs. “Risk-Off” Assets
Mitchnick explained that a “risk-on” asset, such as stocks, is typically bought by investors when they feel confident and are willing to take on more risk for potential gains. On the other hand, “risk-off” assets are favored during periods of uncertainty, as they are perceived to be more stable. Gold, for example, is a well-known “risk-off” asset, valued for its tendency to hold or increase in value during economic downturns.
The Misconception About Bitcoin
According to Mitchnick, many in the crypto industry have inaccurately promoted Bitcoin as a “risk-on” asset due to its inherent volatility. He noted that while Bitcoin is indeed a risky asset, it does not follow the same patterns as equities and other typical risk-on investments. The long-term factors driving Bitcoin’s value are fundamentally different and, in some cases, even opposite to those affecting traditional risk-on assets.
Mitchnick elaborated, saying:
“Some crypto research publications and daily commentaries take the fact that Bitcoin is a risky asset and extrapolate that to mean it is a risk-on asset, which is misleading. Bitcoin’s market behavior does not mirror equities.”
Bitcoin as an Emerging Monetary Alternative
Mitchnick argues that Bitcoin should be viewed primarily as an emerging global monetary alternative. Its unique characteristics—being a scarce, decentralized, and non-sovereign asset—make it distinct from traditional risk-on assets. Bitcoin does not carry the country-specific or counterparty risks that typically influence other risk-on investments. He described Bitcoin as:
“An asset that holds no country-specific risk or counterparty risk, and serves as an alternative for those concerned about currency devaluation, political instability, and fiscal challenges.”
This perspective makes Bitcoin an attractive option for investors wary of the potential pitfalls of excessive money printing and inflation.
Lack of Correlation with Equities
Mitchnick also pointed out that Bitcoin, like gold, has a minimal long-term correlation with US stocks. While short-term correlations can occasionally spike, on average, the correlation remains close to zero—similar to gold’s relationship with equities. He noted that Bitcoin’s price tends to be influenced by only a few major events each year, which poses a challenge for publications looking to provide daily price analysis.
“Daily fluctuations in Bitcoin’s price are often linked to factors like the unemployment rate or stock market trends, which have no direct connection to Bitcoin,” Mitchnick explained.
Final Thoughts
In conclusion, Mitchnick believes the crypto industry needs to refine its messaging around Bitcoin. Mislabeling it as a risk-on asset only serves to confuse investors and undermines its potential as a global monetary alternative. With its distinct properties, Bitcoin stands apart from other risk-on investments, making it a unique addition to diversified portfolios.
Source: Bloomberg
