BlackRock Dismisses Bitcoin’s Over 50% Drop as Non-Structural: Leverage Was the Culprit

BlackRock stated that Bitcoin’s more than 50% decline from its October 2025 peak has not changed the long-term investment thesis, noting that the move was driven by leverage unwinding and weakening capital flows.

According to the BlackRock report cited by Wu Blockchain, Bitcoin’s retreat does not mean the asset’s long-term investment potential has vanished. The report cited the unwinding of leveraged positions, weakening capital inflows, and digital asset treasuries slowing their purchases as the primary reasons for the decline.

While Bitcoin was trading above $120,000 in October 2025, the amount of open interest in cryptocurrency futures exceeded $90 billion. Approximately 80 percent of these positions consisted of perpetual futures contracts outside the Chicago Mercantile Exchange (CME).

Liquidation waves stood out in the Bitcoin decline

According to the report, tariff-induced market shocks triggered multiple liquidation waves in the cryptocurrency market. The forced closure of leveraged positions led to Bitcoin falling below $60,000 in June 2026.

There was also a significant shift in institutional capital flows. While Spot Bitcoin ETPs received approximately $60 billion in inflows from January 2024 to October 2025, they subsequently saw about $5 billion in net outflows. During a period when investor interest shifted toward AI-focused products, BlackRock’s executive summary stated these products attracted approximately $30 billion; in the tally cited by Wu Blockchain, AI-focused fund inflows exceeded $46 billion.

Sales by Strategy and other digital asset treasuries, as well as large investors, also increased price pressure. Despite this, BlackRock stated that a small Bitcoin allocation in a portfolio could provide diversification and offer potential protection against the declining purchasing power of fiat currencies.