Bitcoin (BTC) falling more than 50% from its $126,200 all-time high was a “positioning correction,” BlackRock says.
Key points:
- A BlackRock report attributes Bitcoin’s decline below $60,000 to cascading liquidations as leverage was purged from the market.
- The long-term BTC investment thesis as a “low-correlation diversifier” remains intact, analysts confirm.
- BlackRock sees Bitcoin’s risk-asset correlation declining as time goes on.
BlackRock predicts falling correlation of BTC with risk assets
In a report published this week, the world’s largest asset manager preserved its bull thesis despite waves of outflows from its spot Bitcoin exchange-traded fund (ETF) in 2026.
BlackRock’s iShares Bitcoin Trust (IBIT) saw net outflows of $78.9 million in the week through Aug. 14. Across all ETF products, outflows totaled $267.2 million.
“We view bitcoin’s ~50% pullback from October 2025 highs as a positioning correction rather than a change in its investment case. A historically overleveraged market, enabled by perpetual futures, suffered cascading liquidations compounded by slowing ETP outflows and digital asset treasury demand,” the report states.
US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors
During last year’s peak, Bitcoin experienced a surge in speculative positioning. BlackRock pointed to open interest on Bitcoin derivatives markets passing $90 billion in early October amid heavy use of leverage. The unwinding of these positions increased the correlation between BTC/USD and risk assets more broadly.
“A macro-driven risk-off catalyst (China tariff headlines) triggered large-scale deleveraging across precious metals and crypto markets. The resulting liquidation waves drove prices down to cycle lows below $60,000 per bitcoin by June 2026,” it explained.
Bitcoin futures open interest data (screenshot). Source: BlackRock
Institutional Bitcoin demand has suffered this year as a combination of geopolitical uncertainty and growing inflation pressures saw capital flowing into established risk-asset classes, among them US equities, with the S&P 500 hitting record highs last week. Bitcoin has failed to follow suit, but BlackRock forecasts that this may change.
“With speculative excess now largely purged, we believe bitcoin’s recent episodes of elevated risk correlation should normalize lower, consistent with its longer-term record as a low-correlation diversifier,” it continued.
Longer-term resilience of BTC stands out
The report highlights that long-term BTC investment returns follow key political and macro events. These include the COVID-19 outbreak in March 2020, the US presidential election the same year, as well as the regional banking crisis and president Donald Trump’s multiple international trade-tariff declarations.
Related: Bitcoin price spike to $64.5K was ‘low-volume liquidity trap’: Analysis
While it initially struggled following some of these events, Bitcoin produced solid returns on a 60-day basis. In the case of the 2020 election, these hit as high as 113%.
“Through multiple shocks in recent years, bitcoin often outperformed both the S&P 500 and gold in the weeks and months following the onset of disruptions,” BlackRock commented.
“This pattern has held true thus far in 2026 amid ongoing conflict between the U.S. and Iran, with bitcoin delivering positive returns and outperforming equities and gold following the onset of hostilities in February and the end of the ceasefire agreement in July.”
Macro asset returns comparison (screenshot). Source: BlackRock
Further data puts Bitcoin’s 12-month realized volatility at 40% compared to 26% for gold and 12% for the S&P 500. The rolling six-month correlation between Bitcoin and the S&P, presented as a 10-year average, is now 0.18 — still notably higher than gold’s 0.06 reading.
“Bitcoin’s underlying investment case aligns more closely with that of gold — as a global monetary alternative and a hedge against inflation, global disorder, and declining trust in fiat currencies. Even for gold, which tends to be viewed as a standard uncorrelated, store-of-value asset, brief periods of high equity correlation exist, including COVID in 2020-2021 and the monetary easing cycle in 2023,” the report added.
Bitcoin vs. S&P 500 correlation data (screenshot). Source: BlackRock
Since October 2025, BTC price performance has led some to question its role as a form of “digital gold.” In a Q1 report, asset manager Grayscale described short-term behavior as being more like a growth stock than gold, noting its low correlation to the latter.