NEW YORK — BlackRock’s iShares Bitcoin ETF (IBIT) has made a significant mark as one of the most successful launches in Wall Street’s history. However, Robert Mitchnick, who leads digital assets at BlackRock, warns that the increasing dependence on leverage within the cryptocurrency market may be undermining bitcoin’s long-term appeal to institutional investors.
During a discussion with Anthony Pompliano and investor Dan Tapiero at the Bitcoin Investor Week conference in New York on Thursday, Mitchnick acknowledged that while bitcoin’s underlying fundamentals are robust, rampant speculation—especially through leveraged derivatives platforms—is creating volatility that could jeopardize its status as a reliable portfolio hedge.
“Nowadays, even minor events that shouldn’t significantly affect prices can lead to drastic changes; for instance, something tariff-related on October 10 caused bitcoin to plummet by 20%,” Mitchnick noted. “This is due to cascading liquidations and automatic deleveraging.”
Despite maintaining its value proposition as a “global, scarce, decentralized monetary asset,” Mitchnick cautioned that short-term trading patterns are increasingly resembling those of a “levered NASDAQ.” This perception might discourage more conservative investors from entering this space.
“The evidence supports my characterization of it,” he remarked regarding bitcoin’s fundamental qualities. “However, recent trading data presents an entirely different picture; if it behaves like levered NASDAQ stocks do during trades, then the threshold for adoption becomes significantly higher.”
Mitchnick also countered claims suggesting that ETFs like IBIT contribute to market volatility. Instead, he pointed fingers at perpetual futures platforms as primary culprits behind instability.
“There’s a common misconception suggesting hedge funds operating through ETFs are responsible for creating volatility and selling off; that’s not what we observe,” he explained. “During particularly turbulent weeks in the bitcoin market recently, only 0.2% of our fund was redeemed. If hedge funds were truly unwinding their positions en masse… we would have witnessed billions being affected instead; instead we saw many billions liquidated across these leveraged platforms.”
In spite of ongoing short-term fluctuations in the market landscape, Mitchnick reaffirmed BlackRock’s dedication to digital assets within an evolving financial ecosystem.
“We see ourselves acting as a bridge between traditional finance and the realm of digital assets,” he stated confidently. “Over time there will undoubtedly be an expanding role for digital assets and this technological theme among our clientele.”
Read More: Bitcoin May Evolve Into Low-Beta Equity Play Reflexively According To BlackRock’s Mitchnik