BlackRock's ETF Chief says Bitcoin's volatility has cooled enough that the case for holding some as a diversifier still stands. But the same analysis flags a 0.53 correlation with the S&P 500 and a long history of deep drawdowns, which is why the recommendation stays cautious.
That 0.53 correlation number matters because a diversifier is supposed to move independently. When stocks drop and Bitcoin drops too, at least some of the time, the hedge doesn't work the way a pure allocation model assumes. CryptoDaily reported the figure as part of BlackRock's latest assessment of how Bitcoin fits in a multi-asset portfolio.
Bitcoin's volatility has come down significantly from the extremes seen in prior cycles. That cooling is what reopened the diversification argument in the first place. When swings are wild, even a small allocation can dominate portfolio risk. When they shrink, the math starts to look more reasonable.
But drawdowns are the other side of the coin. BlackRock points to a pattern of deep losses that Bitcoin has produced repeatedly, and that history is what caps the recommended allocation at a small size. The firm is not saying Bitcoin belongs in every portfolio at any size.
It is saying a modest slice can still earn its place if volatility stays contained.
So the verdict from BlackRock is narrow but real. Bitcoin works as a diversifier at the margins, not as a core holding. The 0.53 correlation and the drawdown history are the two things that keep it there.
What resolves the question is whether volatility stays low through the next equity shock. If Bitcoin holds up when stocks fall hard, the diversifier case strengthens. If it correlates higher under stress, the 0.53 figure will look generous.
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