Bitcoin's (BTC) more-than-50% decline from its $126,200 all-time high was a "positioning correction" rather than a change in its investment case, according to BlackRock. In a report published this week, the world's largest asset manager attributed Bitcoin's fall below $60,000 to cascading liquidations as leverage was purged from the market. The firm confirmed that its long-term investment thesis of Bitcoin as a "low-correlation diversifier" remains intact, and said it expects the cryptocurrency's correlation with risk assets to decline over time.

BlackRock predicts falling correlation of BTC with risk assets

BlackRock preserved its bull thesis despite waves of outflows from its spot Bitcoin exchange-traded fund (ETF) in 2026. The firm's iShares Bitcoin Trust (IBIT) recorded net outflows of $78.9 million in the week through Aug. 14, while outflows across all ETF products totaled $267.2 million, according to data from Farside Investors. That flow backdrop matters because spot ETFs have become one of the most visible channels for institutional Bitcoin exposure, making weekly subscriptions and redemptions a key near-term gauge of demand.

"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.

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, adding that the unwinding of these positions increased the correlation between BTC/USD and risk assets more broadly. In other words, the report frames the recent price action as a market-structure event rather than a fundamental reassessment of Bitcoin's role.

"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," the report explained.

Institutional demand for Bitcoin has suffered this year, as a combination of geopolitical uncertainty and growing inflation pressures has seen capital flow 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," the report 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 that same year, the regional banking crisis, and President Donald Trump's multiple international trade-tariff declarations.

While Bitcoin initially struggled following some of these events, it produced solid returns on a 60-day basis. In the case of the 2020 election, these returns reached 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."

Further data in the report puts Bitcoin's 12-month realized volatility at 40%, compared with 26% for gold and 12% for the S&P 500. The rolling six-month correlation between Bitcoin and the S&P 500, 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.

Since October 2025, BTC's price performance has led some to question its role as a form of "digital gold." In a Q1 report, asset manager Grayscale described Bitcoin's short-term behavior as being more like a growth stock than gold, noting its low correlation to the latter.