Since 2009 to date, bitcoin (BTC) has captured the attention of investors for its characteristics that make it a safe haven asset. These include its inherent scarcity and its ability to operate outside of traditional financial systems. However, bitcoin is still in its early stages of adoption as a global means of payment or store of value. In this context, the question arises: What is missing to promote its definitive integration?
For BlackRock, the world's largest asset manager, BTC will become a «hedge against risks that traditional assets cannot address, particularly in times of greater geopolitical and economic uncertainty.» This perspective is explained in its latest whitepaper entitled «Bitcoin: A Unique Diversifying Asset.» As BitcoinDynamic already reported, the study published by the firm led by Larry Fink maintains that investors are looking for assets that are not linked to the political decisions of a government or a central bank.
Precisely, bitcoin differs from fiat money, which is constantly devalued by the monetary emission of central banks. This is due to the fact that The digital currency has a total supply set at 21 milliona factor that influences its price in the medium and long term. The report also indicates that some investors see it as a “safe haven” asset in times of monetary and geopolitical instability.
To support this claim, the specialists who prepared the report use a table in which you can see: How the S&P 500 (SPX), Gold (Gold) and BTC performed in the face of events such as: the COVID-19 pandemic, the war between Russia and Ukraine, the 2020 US presidential elections, among others.
BTC returns 10 and 60 days after each event. Source: BlackRock. The table shows that the three indicators did not behave in the same way in response to each of the events. In addition, it is highlighted that Those who invested in BTC earned returns above 15%For example, during the Russian invasion of Ukraine, gold and BTC increased in value over the 60 days, while the S&P 500 performed more subdued.
What's next for bitcoin?
BlackRock also notes that There is growing concern in the United States and internationally about the state of federal deficits and debt.. “Based on our experience with clients to date, this explains a substantial part of the recent surge in institutional interest in BTC,” the report details. The following chart shows how US debt has increased since World War II to date (yellow area) and the fiscal deficit in that country (orange line).
Evolution of US debt and fiscal deficit from 1940 to the present. Source: BlackRock. The firm that owns the world's largest BTC exchange-traded fund (ETF) highlights that, despite the notable rise, it is still “uncertain” what will be its final development as a generalized store of value.
However, he maintains that will reach a market capitalization of $1 trillion. He further notes that the digital currency outperformed major assets in 7 of the past 10 years, “leading to an extraordinary return of over 100% annualized over the past decade.” He clarifies: “This performance was achieved despite it also being the worst-performing asset in the other three of those 10 years, with four declines of over 50%. Through these historical cycles, it has demonstrated the ability to recover from such declines and reach new highs, despite these prolonged bear market periods.” The following graph shows the evolution of the BTC price from its inception to 2024.
BTC price evolution from 2010 to 2024. Source: BlackRock. For BlackRock, the price movements reflect “the evolving prospects over time of being widely adopted as a global monetary alternative.”