BlackRock says Bitcoin will soon be risky not to own.
That’s if, and a big if, the price of the top cryptocurrency truly manages to break free of its tight correlation to riskier assets like US technology stocks.
“The correlation between bitcoin and tech stocks is going to be an absolutely critical driver,” Robbie Mitchnick, head of digital assets at BlackRock, told DL News. “If Bitcoin trades more like a tech stock, it is not very interesting to institutions.”
But if Bitcoin trades with low or even negative correlation to what he calls “left tail” events, or extreme bouts of downside risk, “then it becomes potentially a very important portfolio asset to all manner of institutional portfolios.”
Added Mitchnick, who wrote the comments following his appearance at the Token2049 crypto conference: “Then the conversation goes from, ‘Is this too risky for us?’ to, ‘Might it be risky not to own any?’”
Bitcoin backers are optimistic as the coin’s performance continues to “decouple” from equities and begins to stand on its own as a relatively low-volatility asset.