NEW YORK — While BlackRock’s iShares Bitcoin ETF (IBIT) is among the most successful product launches in Wall Street history, the crypto market’s growing reliance on leverage could do long-term damage to bitcoins institutional appeal, according to Robert Mitchnick, head of digital assets at BlackRock.
Speaking with Anthony Pompliano and investor Dan Tapiero at the Bitcoin Investor Week conference in New York on Thursday, Mitchnick said that while bitcoin’s fundamentals remain strong, excessive speculation — especially on leveraged derivatives platforms — introduces instability that threatens the asset’s positioning as a serious portfolio hedge.
“These days, when you have a tiny thing that shouldn’t have any price impact at all — and if it does, it has to be small — like, say, October 10, some tariff-related thing, and the next thing you know, [bitcoin] is down 20%,” Mitchnick said. “That’s because you get cascading liquidations and automatic deleveraging.”
While bitcoin’s long-term value proposition as a “global, scarce, decentralized monetary asset” remains intact, Mitchnick warned that the asset’s short-term trading behavior is beginning to resemble “levered NASDAQ” — a view that may deter conservative allocators from entering the space.
“The facts are more on the side of how I characterized it,” he said, referring to bitcoin’s fundamental properties. “But now the trading data, at least recently, looks very different, and the bar for adoption if it trades like the leveraged NASDAQ is much, much, much higher.”
Mitchnick also pushed back on the idea that exchange-traded funds (ETFs) like IBIT contribute to volatility, pointing instead to perpetual futures platforms as the source of instability.
“There’s a misconception out there that it’s a bunch of hedge funds in ETFs creating volatility and selling; that’s not what we’re seeing,” he said. “In a week that was obviously tumultuous in the bitcoin market, we had 0.2% of the fund redeemed. If there were actually hedge funds massively liquidating trades… you would have seen billions. We saw billions liquidated on these leveraged platforms.”
Despite near-term turbulence, Mitchnick emphasized that BlackRock remains committed to digital assets as part of a broader financial transformation.
“We see ourselves as having the role of a bridge … between traditional finance and the digital asset world,” he said. “Over time, digital assets and this technology theme in general will certainly continue to play a bigger role for many of our clients.”
Read more: Bitcoin may evolve into low-beta equity play reflexively, says BlackRock’s Mitchnik
