BlackRock: Bitcoin case intact after 50% decline

BlackRock says bitcoin’s investment case remains intact despite a fall of more than 50% from the October 2025 high of $126,300. The firm attributes the decline to a large unwind of leveraged positions and selling by major holders rather than a change to the asset’s long-term thesis.

In a report titled “Re-Underwriting Bitcoin,” BlackRock lays out trading and positioning events that preceded the drop. Speculative futures open interest exceeded $90 billion before the October peak. On Oct. 10, a single-day cascade of liquidations removed roughly $20 billion of that open interest. Additional liquidation waves followed in February and June of the following year.

The firm identifies three overlapping drivers of the downturn: leverage-related selling within crypto markets, a slowdown in institutional inflows, and selling pressure from large holders. The report notes that institutional capital partly rotated into funds focused on artificial intelligence, which raised more than $46 billion in the months after October and reduced some demand for bitcoin.

Trading flows during the drawdown show significant reversals. U.S. spot bitcoin exchange-traded products recorded about $5 billion in aggregate outflows, offsetting much of the inflows that supported the 2024–2025 rally. The corporate treasury company Strategy sold a small amount of bitcoin in June and adopted a capital-allocation framework that allows further sales under specified conditions. BlackRock’s iShares Bitcoin Trust took part in a $1.3 billion block trade during the period and also drew fresh inflows on stronger days, including a session with a $50.2 million inflow.

The report uses the term “dual personality” to describe bitcoin’s behavior in portfolios. During broad deleveraging episodes the asset can move in step with equities; at other times it behaves more like a hedge against geopolitical shocks. BlackRock characterizes episodes of higher correlation with stocks as temporary rather than permanent.

BlackRock continues to recommend a modest 1%–2% bitcoin allocation for investors who want exposure, specifying that the position be funded by trimming equities within a traditional 60/40 stock-and-bond portfolio. The report focuses on market structure and investor positioning to explain the recent price action and maintains that the firm’s prior investment case for bitcoin has not been overturned by the drawdown.