Rampant speculation across crypto derivatives venues is amplifying market swings and jeopardizing bitcoin’s reputation as a dependable hedge, according to BlackRock’s head of digital assets.
NEW YORK — Even as BlackRock’s iShares Bitcoin ETF (IBIT) ranks among the most successful launches in Wall Street history, the broader market’s growing dependence on leverage could erode bitcoin’s institutional appeal over time, said Robert Mitchnick, the firm’s digital assets chief.
Speaking alongside Anthony Pompliano and investor Dan Tapiero at the Bitcoin Investor Week conference in New York on Thursday, Mitchnick argued that bitcoin’s core fundamentals remain intact. However, he cautioned that heavy speculation — particularly on highly leveraged derivatives platforms — is injecting instability that undermines bitcoin’s positioning as a serious portfolio hedge.
He pointed to sharp sell-offs triggered by relatively minor news events as evidence of structural fragility in market plumbing. Small catalysts, he said, can spark outsized moves when cascading liquidations and auto-deleveraging mechanisms kick in across perpetual futures venues.
Mitchnick reiterated that bitcoin’s long-term thesis as a “global, scarce, decentralized monetary asset” has not changed. But he warned that its recent trading patterns resemble those of a “levered NASDAQ,” a dynamic that could discourage more conservative allocators from entering the space.
While the asset’s underlying characteristics support the hedge narrative, he noted that short-term price behavior is telling a different story. If bitcoin continues to trade like a high-beta technology proxy, the hurdle for broader adoption among institutional investors will rise significantly.
Mitchnick also rejected the notion that exchange-traded funds such as IBIT are driving volatility. Instead, he attributed recent turbulence to activity on leveraged perpetual futures platforms.
During a particularly volatile week, he said, IBIT experienced redemptions of just 0.2% of assets — far from the large-scale unwinding some critics had suggested. By contrast, billions of dollars were liquidated across leveraged derivatives platforms, underscoring where he believes the real pressure points lie.
Despite near-term market turbulence, Mitchnick stressed that BlackRock remains committed to expanding its digital asset footprint. The firm sees itself as a bridge between traditional finance and the emerging crypto ecosystem, positioning digital assets as part of a broader technological transformation likely to play an increasing role in client portfolios over time.
