According to BlackRock’s digital assets lead, leverage-driven turbulence is challenging Bitcoin’s core story.

Speculative excess in crypto derivatives markets is intensifying price swings and threatening bitcoin’s credibility as a dependable hedge, according to BlackRock’s digital assets leadership.

NEW YORK — Even as the iShares Bitcoin ETF (IBIT) stands out as one of the most successful ETF rollouts in recent memory, mounting leverage across crypto trading venues could undermine bitcoin’s appeal to institutional investors, said Robert Mitchnick, head of digital assets at BlackRock.

Speaking at the Bitcoin Investor Week conference in New York alongside Anthony Pompliano and investor Dan Tapiero, Mitchnick stressed that bitcoin’s foundational investment thesis remains intact. Its scarcity and decentralized structure continue to underpin its long-term case, he said. The problem, however, lies in how the asset is being traded.

According to Mitchnick, aggressive positioning on perpetual futures platforms has created a fragile market structure. Relatively minor macro or policy headlines can now trigger sharp sell-offs as leveraged positions unwind through cascading liquidations and auto-deleveraging mechanisms.

While bitcoin is often framed as a “global, scarce, decentralized monetary asset,” its recent trading patterns resemble those of a high-beta technology benchmark, he noted. If bitcoin continues to behave like a leveraged version of the Nasdaq, convincing more conservative allocators to treat it as a portfolio diversifier or hedge could become increasingly difficult.

Mitchnick also disputed claims that spot ETFs are amplifying volatility. During a particularly turbulent week for crypto markets, IBIT experienced redemptions of roughly 0.2% of assets — a modest move compared with the scale of liquidations seen on derivatives platforms. Billions of dollars in leveraged positions were forced to unwind during the same period, underscoring where much of the market stress originated.

Despite near-term instability, BlackRock remains committed to expanding its role in digital assets. Mitchnick said the firm views itself as a bridge between traditional finance and the evolving crypto ecosystem, expecting digital assets and related technologies to assume a growing presence in client portfolios over time.