Bitcoin maintained its appeal as a diversification investment despite dropping more than 50% from all-time high, a BlackRock report stated.
Bitcoin (BTC) falling more than 50% from its $126,200 all-time high was a “positioning correction,” BlackRock says.
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.
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