Bitcoin Is ‘Risk-Off,’ Ethereum is ‘Risk-On,’ Says BlackRock

• In a recent presentation, asset manager BlackRock explained that Bitcoin is a “gold alternative” while Ethereum is an equity or speculative tech bet. 

• Meanwhile, Standard Chartered Bank provides an opposite explanation as it claims that Bitcoin is not a geopolitical hedge like gold. 

BlackRock’s Robbie Mitchnick attempted to put the widely debated categorization of Bitcoin (BTC) and Ethereum (ETH) to bed at the recently held Digital Assets Conference (DAC) in Brazil by claiming that the former is a gold alternative and the latter is equity and venture capital. 

According to him, Bitcoin exists as a global decentralized non-sovereign asset that, to a larger extent, serves as a hedge against the increasing global disorder and fast eroding trust in traditional structures such as government, fiat, and banks. On the other side, Mitchnick presented Ethereum as a core infrastructure that underpins a diverse range of blockchain-based applications. In a nutshell, Bitcoin is a risk-off asset, while Ethereum is a risk-on asset or speculative technology bet. 

On one hand, you have BTC, a commodity like gold and an alternative to stocks and bonds. Ethereum, more of a long-term technology bet that this blockchain will provide more use cases and more value to the economy going forward.

In the technical sense, experts believe that Mitchnick’s explanation implies Bitcoin would directly benefit and soar during periods of geopolitical tensions while Ethereum would turn south. However, this was a direct opposite of the recent market move after Iran fired at least 180 ballistic missiles into Israel. As we reported, Bitcoin price took a nosedive to hit a two-week low price of $61.3k, with Ethereum following suit. However, gold recorded an upsurge of 1.3% to trade at $2,670 per ounce. 

Other Experts Opinion on Bitcoin as a Risk Off Asset

In our recent publication, JPMorgan’s Nikolaos Panigirtzoglou pointed out that Bitcoin could benefit from the ongoing geopolitical tension and the upcoming US presidential election. However, investment bank Standard Chartered predicted that the Middle East conflict could force Bitcoin to decline below $60k since the asset is not a safe haven against geopolitical tension. Rather, the bank suggested that Bitcoin is most effective as a hedge against TradeFi issues. 

Gold is a geopolitical hedge. BTC is a hedge against TradFi issues such as bank collapses or de-dollarisation/U.S. Treasury issues.

At press time, Bitcoin was showing signs of rebound as it surged by 2.5% in the last 24 hours and is currently trading at $63.5k. 

According to crypto analyst Justin Bennett, Bitcoin could easily reclaim the $69k-$70k zone if it successfully maintains its position within the range of $63k-$64k. However, failure to secure stabilization within this area could cause the asset to decline to $57k. 

Calling for $70,000 Bitcoin after a 3% Asia session/Friday bounce from $60,000 is pure engagement farming. Either that or these people aren’t traders you want to follow. The ONLY way BTC targets $70,000 is on a reclaim of $64,500. Period. Until then, this is simply a relief rally that’s building more sell-side liquidity at $59,000 and $57,000. Markets seek liquidity…Every day this week, Bitcoin was pumped as soon as the US stock market closed. Round Four? Either way, I think we see $57,000, but some relief to take out the $63,200 shorts would be nice.

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