NEW YORK – While BlackRock’s iShares Bitcoin ETF (IBIT) is among the most successful product launches in Wall Street history, the cryptocurrency market’s growing reliance on leverage could be causing long-term damage to bitcoin assets. institutional appeal, according to Robert Mitchnick, head of digital assets at BlackRock.
During a conversation 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 (particularly on leveraged derivatives platforms) is introducing instability that threatens the asset’s positioning as a serious portfolio hedge.
“Nowadays, when there is something very small that really shouldn’t have any impact on prices, and if it does, it should be small, like, for example, October 10, something related to tariffs, and the next thing you know [bitcoin] “It’s down 20%,” Mitchnick said. “That’s because cascading liquidations and automatic deleveraging occur.”
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 starting to look dangerously like “leveraged NASDAQ,” a perception 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 attributes. “But now trading data, at least lately, looks very different, and the bar for its adoption if it trades like the leveraged NASDAQ is much, much, much higher.”
Mitchnick also rejected the idea that exchange-traded funds (ETFs) like IBIT are contributing to the volatility, pointing instead to perpetual futures platforms as the source of instability.
“There’s a misperception that it’s a bunch of hedge funds in ETFs that are 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 really were hedge funds unwinding trades massively… we would have seen billions. We saw many billions liquidated on these leveraged platforms.”
Despite the near-term turbulence, Mitchnick emphasized that BlackRock remains committed to digital assets as part of a broader financial transformation.
“We see ourselves as a bridge… between traditional finance and the world of digital assets,” he said. “Over time, certainly digital assets and this technology theme in general will continue to play a larger role for many of our clients.”
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