Bitcoin has fallen more than 50% from its October 2025 record, but BlackRock continues to maintain its long-term investment case for the cryptocurrency.
In an August 2026 research report, the world’s largest asset manager attributed Bitcoin’s recent decline primarily to excessive leverage, weaker institutional flows and slower purchases from digital asset treasury companies. BlackRock said the correction reflected changes in market positioning and liquidity rather than a structural change in Bitcoin’s investment characteristics.
Bitcoin reached a record high of $124,606 in October 2025 after rising from around $15,765 in late 2022. However, the cryptocurrency later experienced several major sell-offs, with its price falling below $60,000 in June 2026.
Leverage contributed to Bitcoin’s decline
BlackRock highlighted the rapid growth in Bitcoin futures positioning as one of the factors that amplified the market downturn.
Futures open interest exceeded $90 billion near Bitcoin’s 2025 peak, with around 80% of the exposure coming from perpetual futures traded outside the Chicago Mercantile Exchange. Some offshore platforms offered leverage as high as 50 to 125 times, increasing the risk of forced liquidations during sharp price movements.
The first major deleveraging event followed US tariff announcements involving China in October 2025. Bitcoin fell around 6% on the day, while futures open interest dropped by approximately $20 billion.
Additional liquidation waves in February and June 2026 contributed to further downward pressure on the cryptocurrency.
Bitcoin ETPs see significant outflows
BlackRock also pointed to changing investment flows as another factor behind Bitcoin’s weakness.
Spot Bitcoin exchange-traded products attracted approximately $60 billion between their US launch in January 2024 and October 2025. However, the products later recorded around $5 billion in combined outflows through July 2026.
During the same period, artificial intelligence-focused funds attracted more than $46 billion. BlackRock said the shift may have increased competition for investment capital and reduced allocations toward Bitcoin.
Recent ETF flows have shown some improvement. According to Farside data cited in the report, US spot Bitcoin products recorded $297.5 million in net inflows on August 17 and another $189.3 million on August 18.
BlackRock retains Bitcoin allocation view
Despite the market decline, BlackRock said its long-term investment case for Bitcoin remains unchanged.
The asset manager’s historical analysis found that adding a 1% or 2% Bitcoin allocation to a traditional 60/40 portfolio improved hypothetical risk-adjusted returns over the period studied. A 1% allocation produced a Sharpe ratio of 0.90, compared with 0.81 for the traditional portfolio, while a 2% allocation produced a ratio of 0.96.
BlackRock continues to highlight Bitcoin’s capped supply and relatively low historical correlation with the S&P 500 as factors supporting its diversification potential.
However, the firm also emphasized that Bitcoin remains highly volatile and speculative. Its research does not represent a prediction that Bitcoin prices will recover, and the historical portfolio analysis does not guarantee future performance.
Bitcoin was trading near $64,300 on August 19 after recovering above the $64,000 level, as investors continued to monitor ETF flows, futures positioning and activity from corporate Bitcoin holders.
