Bitcoin’s long-term investment case remains intact despite falling more than 50% from its $126,200 all-time high, according to a new report from BlackRock.
The world’s largest asset manager described the decline as a “positioning correction” rather than a fundamental change in Bitcoin’s outlook. BlackRock believes much of the excessive leverage and speculative activity that built up around Bitcoin’s peak has now been removed from the market.
BlackRock Says Bitcoin’s Sell-Off Was Driven by Deleveraging
Bitcoin’s decline below $60,000 followed a period of unusually heavy leverage in crypto derivatives markets.
At the market peak in October 2025, Bitcoin derivatives open interest climbed above $90 billion, reflecting aggressive speculative positioning.
When broader macroeconomic conditions deteriorated, heavily leveraged positions began to unwind. This triggered a wave of liquidations that accelerated Bitcoin’s decline.
BlackRock said the sell-off was also intensified by weaker demand from exchange-traded products and digital asset treasury companies.
Bitcoin ETF Outflows Add to Market Pressure
Institutional demand has also weakened during parts of 2026.
BlackRock’s iShares Bitcoin Trust (IBIT) recorded approximately $78.9 million in net outflows during the week ending Aug. 14.
Across all US spot Bitcoin ETF products, total outflows reached around $267.2 million during the same period.
Despite those withdrawals, BlackRock continues to support the longer-term case for Bitcoin as a portfolio diversification asset.
Macro Shock Triggered Bitcoin Liquidations
BlackRock linked part of Bitcoin’s sharp decline to a broader risk-off move across global markets.
Trade tensions involving China helped trigger deleveraging across cryptocurrencies and precious metals. As investors reduced risk exposure, Bitcoin experienced increasingly aggressive liquidation activity.
The resulting selling pressure eventually pushed BTC below $60,000 by June 2026.
However, BlackRock argues that this process removed much of the speculative excess that had accumulated during the previous rally.
Bitcoin’s Correlation With Stocks Could Decline
One of BlackRock’s main arguments is that Bitcoin may gradually return to behaving more independently from traditional risk assets.
During the sell-off, Bitcoin’s correlation with equities increased as leveraged investors liquidated positions across multiple asset classes.
Now that much of this leverage has been removed, BlackRock expects Bitcoin’s correlation with risk assets to normalize at lower levels.
The firm continues to view BTC as a potential low-correlation portfolio diversifier over longer periods.
Institutional Bitcoin Demand Faces Challenges
Bitcoin has struggled to match the performance of some traditional markets during 2026.
Geopolitical uncertainty and renewed inflation concerns have encouraged investors to allocate more capital toward established asset classes.
US equities have benefited, with the S&P 500 reaching record highs, while Bitcoin has remained well below its previous peak.
However, BlackRock believes that this divergence does not necessarily undermine Bitcoin’s long-term investment thesis.
Bitcoin Has Historically Recovered After Major Shocks
The report examined Bitcoin’s performance following several major political and economic events.
These included the COVID-19 market shock in March 2020, the 2020 US presidential election, the regional banking crisis and major changes in US trade policy.
Bitcoin often experienced weakness immediately after these events. However, its performance improved considerably over longer periods.
Following the 2020 presidential election, for example, Bitcoin generated returns of as much as 113% over a 60-day period.
BlackRock noted that Bitcoin has frequently outperformed both gold and the S&P 500 in the weeks and months following major disruptions.
Bitcoin Performance During the 2026 Iran Conflict
BlackRock also highlighted Bitcoin’s behavior during the ongoing conflict between the United States and Iran.
According to the report, Bitcoin delivered positive returns and outperformed equities and gold following the beginning of hostilities in February and again following the end of the ceasefire agreement in July.
The performance supports BlackRock’s argument that Bitcoin can behave differently from traditional risk assets during periods of geopolitical stress.
Bitcoin Volatility Remains Far Above Gold
Despite its diversification potential, Bitcoin remains significantly more volatile than traditional assets.
Bitcoin’s 12-month realized volatility stands at around 40%, according to BlackRock.
By comparison, gold has recorded approximately 26% volatility, while the S&P 500 stands near 12%.
Bitcoin’s six-month rolling correlation with the S&P 500, measured over a 10-year average, currently sits around 0.18.
Gold’s comparable correlation is significantly lower at approximately 0.06.
BlackRock Compares Bitcoin’s Investment Case to Gold
BlackRock believes Bitcoin’s underlying investment thesis increasingly resembles that of gold.
Both assets can potentially serve as alternatives to traditional monetary systems and as protection against inflation, geopolitical instability and declining confidence in fiat currencies.
However, the firm noted that even gold can experience temporary periods of strong correlation with equities.
Similar behavior occurred during the COVID-19 period and during monetary easing in 2023.
Therefore, temporary increases in Bitcoin’s correlation with stocks may not necessarily invalidate its longer-term role as a diversification asset.
Is Bitcoin Still Digital Gold?
Bitcoin’s decline since October 2025 has renewed debate over whether it can genuinely function as “digital gold.”
Some asset managers have questioned that comparison. Grayscale, for example, previously argued that Bitcoin’s short-term behavior can resemble a growth stock more closely than gold.
BlackRock takes a more constructive longer-term view.
The firm believes the speculative excess that contributed to Bitcoin’s steep decline has now been largely removed. If leverage remains lower and institutional adoption continues, Bitcoin could gradually return to behaving more like an independent monetary asset rather than a highly correlated risk trade.
