Blackrock Believes Bitcoin Could Thrive, Even in a Recession

Bitcoin [BTC], at the time of writing, was trading at $85,387, up 2.30% in the last 24 hours. However, market sentiment remains divided.

Bitcoin [BTC] was trading at $85,387 at the time of press, registering a 2.30% increase over the last 24 hours. However, despite this price uptick, cryptocurrency market sentiment seemed largely focused on other pressing issues.

As reported by CCCoin, Bitcoin’s daily institutional outflows continued, with the total volume dropping by 54%, from 58.6K BTC/day to 26.9K BTC/day.

However, on a broader note, Robbie Mitchnick, from behemoth asset manager Blackrock (NYSE:BLK), expressed an optimistic outlook on Bitcoin’s prospects, even in a potential recessionary scenario.

According to Mitchnick, who is the Head of Digital Assets at Blackrock, Bitcoin stands to benefit from several key macroeconomic trends that are typically observed during periods of economic downturn.

These trends include fiscal stimulus, lower interest rates, and monetary easing, all of which contribute to a macroeconomic environment that favors decentralized digital assets.

In addition to these factors, Mitchnick highlighted the heightened fears of social unrest in the current socio-economic climate. These fears, he said, could drive more investors towards seeking refuge in alternative assets, like Bitcoin, which is often touted for its role as a hedge against inflation and broader market volatility.

As we progress through the second quarter of 2024, the true extent of Bitcoin’s resilience will be put to the ultimate test.

Will the world’s leading cryptocurrency manage to retain its value and liquidity in the face of macroeconomic headwinds?

Only time will tell whether Blackrock’s optimistic stance on Bitcoin will pay off in the long run.

What did Blackrock say?

Earlier this year, reports emerged that Blackrock was planning to launch an iShares Bitcoin Trust ETF (IBIT), marking a significant step for the institutional investment giant in the cryptocurrency market.

The iShares Bitcoin Trust ETF is currently being listed on the New York Stock Exchange (NYSE).

As of the 15th of February, Blockr.io data indicated that Blackrock was holding 570,582 BTC in its treasury. Of this total, 22,076 BTC were reportedly added in 2024 alone.

According to AMBCrypto’s analysis, Bitcoin’s price dropped below $80k on the 10th of March due to premature expectations on the economic outlook.

Key factors that morning included early rate cut speculation, Bitcoin’s evolving role as a strategic reserve, and недостаточное внимание к кризису госдолга США.

These pressures were further compounded by Trump’s stringent tariff plans.

While the short-term market reaction to these developments led to the sharp dip, Blockr.io also highlighted an interesting tidbit. Despite the bear market, Blackrock saw a monthly-high inflow of $218.10 million in March. This finding serves to further reinforce Mitchnick’s thesis.

The possibility of a U.S. recession has once again come to the fore after the FOMC meeting, where Chairman Jerome Powell adopted a “wait-and-see” approach. Essentially, the possibility of a recession can’t be entirely ruled out just yet.

Bitcoin’s role in a recession

A key bullish signal during a recession is economic slowdown. Weak labor data will dampen aggregate demand, prompting the Federal Reserve to intervene with liquidity via interest rate cuts.

This liquidity influx will often support risk assets like Bitcoin in the mid-term.

However, while Blackrock is bullish, a recession will typically play out through a brief cycle of decreasing demand, increasing unemployment, and market corrections. This could put Bitcoin’s narrative as a safe haven to the ultimate test.

Bitcoin’s 22% decline from its all-time high of $109k could be a sign of a larger market correction, with more volatility to come. This is unless Trump’s economic retest triggers a shift in market conditions.

In February, inflation saw a month-on-month decline of 0.2%, decreasing from 3% in January.

This easing inflationary pressure has seen the Fed pause its efforts to hike rates further, although the possibility of more hikes in the latter half of the year remains.

However, Blackrock’s bullish thesis will likely depend on a more complete market flush-out. This signals that a deeper correction might be needed before a new bull market can truly emerge.