BlackRock's new bitcoin paper outlines the cryptocurrency's qualities as 'unique' hedge against global risks

After launching the most successful spot bitcoin ETF on the market, BlackRock has now decided to issue a lengthy paper detailing the cryptocurrency's unique standing among major asset classes.

Bitcoin has a market capitalization north of $1 trillion and BlackRock's spot bitcoin ETF, launched at the beginning of this year, has accumulated assets under management of $21 billion, also making it one of the most successful exchange-traded funds in history.

In a new, nine-page whitepaper, BlackRock outlines what makes bitcoin not only a "unique diversifier," but also an asset that many investors struggle to analyze "relative to traditional assets." Correlations with U.S. equities or USD interest rates have been short-lived, the paper argues.

One of BlackRock's key points when dissecting both bitcoin's performance, and the difficulty of predicting its price, is the claim that the cryptocurrency "reflects little fundamental exposure" to the macro factors that impact most traditional asset classes. The Wall Street firm points out that while bitcoin remains a "risky" asset class, it has outperformed all other major asset classes in seven of the last 10 years.

BlackRock also mentions, however, that in the three years bitcoin didn't outperform other asset classes, it was the worst performing.

"These movements in bitcoin's price continue to reflect, in part, its evolving prospects through time of becoming adopted on a widespread basis as a global monetary alternative," BlackRock said in the paper. 

Because bitcoin appears to be isolated from global macro factors, for some it has become a "flight to safety" amid geopolitical tensions, the paper said. BlackRock also makes the case for bitcoin providing protection from the U.S. dollar potentially weakening as a result of the federal deficit.