BlackRock

Odyssey

Bitcoin

BlackRock has revisited its investment case for Bitcoin after one of the asset’s sharpest drawdowns of the current cycle, asking whether the assumptions behind institutional adoption still hold.
The Aug. 17 <a href="https://www.blackrock.com/us/financial-professionals/insights/re-underwriting-bitcoin" rel="noopener noreferrer nofollow">report</a>, titled Re-Underwriting Bitcoin: Still a Portfolio Diversifier, comes as Bitcoin trades near $64,700, far below the <a href="https://www.thestreet.com/crypto/markets/bitcoin-has-never-broken-this-line-in-15-years-it-is-on-it-right-now" rel="noopener noreferrer nofollow">record levels</a> reached in October 2025.
Rather than treating the decline as evidence that Bitcoin’s investment thesis has broken down, BlackRock examined how the asset behaved through the selloff and what that means for portfolio construction.
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<h2 id="can-bitcoin-still-earn-a-place-in-portfolios">Can Bitcoin still earn a place in portfolios?</h2>
Bitcoin has fallen roughly 50% from its October 2025 high, <a href="https://www.blackrock.com/us/financial-professionals/insights/bitcoin-unique-diversifier" rel="noopener noreferrer nofollow">according </a>to BlackRock, which attributed much of the decline to crypto-market deleveraging and changing investor flows rather than a fundamental deterioration in Bitcoin’s long-term case.
Bitcoin reached an all-time high above $126,000 in October 2025 before a sharp deleveraging event later that month helped trigger a prolonged downturn. It was trading around $64,779 on Tuesday, down roughly 26% year-to-date and about 49% from its peak.
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 <figcaption>Bitcoin price at press time. Source: <a href="https://app.decibel.trade/trade/BTC-USD" rel="noopener noreferrer nofollow">Decibel</a>
 </figcaption>
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BlackRock said the selloff&nbsp;underscored&nbsp;Bitcoin’s “dual personality.” The report highlighted how Bitcoin can move alongside risk assets when investors are deleveraging, but behave differently during periods of <a href="https://www.thestreet.com/crypto/markets/latest-u-s-iran-conflict-sends-oil-up-and-crypto-tumbling" rel="noopener noreferrer nofollow">geopolitical stress</a>. The firm argued that heightened correlations with traditional markets have historically been episodic rather than structural.
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BlackRock said its updated 10-year analysis supports keeping Bitcoin exposure relatively small.
<blockquote>
 “A modest 1–2% allocation to bitcoin would have improved risk-adjusted returns in a traditional 60/40 portfolio,” the firm said.
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<h2 id="blackrock-puts-earlier-bitcoin-thesis-through-stress-test">BlackRock puts earlier Bitcoin thesis through stress test</h2>
The conclusions build on BlackRock’s September 2025 <a href="https://www.blackrock.com/us/financial-professionals/insights/re-underwriting-bitcoin" rel="noopener noreferrer nofollow">research</a>, when the firm argued that Bitcoin did not fit neatly into traditional “risk-on” or “risk-off” frameworks because its return drivers differed from those of stocks and other conventional risk assets.
The difference now is that BlackRock has tested that thesis against a major drawdown.&nbsp;
Its latest research places greater emphasis on Bitcoin’s changing correlations and on portfolio sizing after the selloff.
BlackRock also has direct exposure to growing institutional demand through its iShares Bitcoin Trust ETF (IBIT), <a href="https://www.coindesk.com/markets/2024/01/18/blackrocks-bitcoin-etf-hits-1b-aum-in-one-week" rel="noopener noreferrer nofollow">launched </a>in January 2024. IBIT had about $48 billion in net assets as of Aug. 17 despite a 26.5% year-to-date decline.
For financial advisers and institutional allocators, BlackRock’s updated analysis effectively shifts the discussion from whether Bitcoin is volatile to whether a small allocation can improve portfolio outcomes despite that volatility.&nbsp;
The firm’s answer remains that a measured allocation can serve as a long-term strategic diversifier.
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BlackRock updates its Bitcoin outlook after historic selloff

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