BlackRock Called Bitcoin a Store of Value, Not a Global Payment Network

• Robert Mitchnick spoke in an interview about his view of bitcoin as a store of value rather than a global payment system.
• He noted that institutions have leveled the playing field with retailers in bitcoin ETFs.
• The head of digital assets also expects stablecoins to “go beyond” the crypto market.

Today, bitcoin primarily serves as a store of value, while it is too early to use it as a global payment system. This was stated by Robert Mitchnick, Head of Digital Assets at BlackRock.

According to him, scaling up payments requires a serious development of the Lightning Network infrastructure and other second-tier solutions:

Mitchnick noted that the structure of investors in BlackRock’s bitcoin ETFs has changed significantly in 2024. While in the first quarter, about 80% of investors were retail buyers, today the share of retail and institutional investors has equalized.

In addition, bitcoin is positioned mainly as an arbitrage tool for hedge funds – “long spot short futures positions.”

At the same time, large financial institutions, including pension funds and family offices, see the first cryptocurrency as a diversification tool and a hedge against macro risks.

According to Mitchnick, historically, globally accepted monetary alternatives have included “gold, bitcoin, and to some extent silver.” In this context, he stressed that the crypto industry “scored a self-inflicted wound” when it started calling bitcoin a risky asset, forming trading patterns of behavior.

Low interest rates, the weakness of the dollar, and rising liquidity are natural support for bitcoin. At the same time, he said, bitcoin “should not react to geopolitical risks” as it is not tied to a specific country.

It is worth noting that Michael Saylor, co-founder of Strategy (formerly MicroStrategy), sees bitcoin as the foundation of the new global financial system, while QCP Capital has described interest in bitcoin as a “defensive asset.”

Mitchnick paid special attention to the role of stablecoins, calling them “a convenient way to move value efficiently.” He expects that “stablecoins have the potential to greatly expand beyond just the sort of crypto trading ecosystem and DeFi” to retail payments, corporate transactions, and international transfers.

Meanwhile, Tether CEO Paolo Ardoino recently stated that the need for stablecoins in general and USDT in particular will disappear in 50 years.

However, according to Mitchnick, competition between the first cryptocurrency and stablecoins is only partially possible, particularly in the retail transfer segment.

Commenting on the market sentiment after the events of October 10-11, he warned that one should not expect an immediate recovery:

His key advice to investors remains the same: “don’t try to time the market” and consider a long-term holding strategy with a horizon of three years or more.

At the same time, Mitchnick noted the transformation of BlackRock CEO Larry Fink’s views on bitcoin, which was gradual: “the credit for that is overwhelmingly with him for doing the work being open-minded,” and studied the technology and market in depth.

According to him, Fink deserves respect for his ability to change his position based on new data, because “it’s a worthy quality to reconsider your views when the facts change.”

As a reminder, the BlackRock CEO recently admitted that he no longer considers bitcoin to be a “money laundering index”, as he perceived it back in 2017.