BlackRock Warns Leverage Risks Undermining Bitcoin's Institutional Appeal

Excessive speculation through leveraged derivatives platforms could jeopardize bitcoin's positioning as a reliable portfolio hedge, says BlackRock executive.

Published on Feb. 15, 2026

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BlackRock's head of digital assets, Robert Mitchnick, cautioned that a growing reliance on leverage within the cryptocurrency market could undermine bitcoin's long-term appeal to institutional investors. Mitchnick highlighted instances where seemingly minor events triggered disproportionately large price swings due to "cascading liquidations and auto-deleveraging" on leveraged platforms. While acknowledging bitcoin's fundamental value proposition, Mitchnick expressed concern that its short-term trading patterns are increasingly resembling those of a "levered NASDAQ", which could deter conservative allocators from entering the space.

Why it matters

Institutional investors, such as pension funds and endowments, typically prioritize stability and risk management. The volatility associated with leveraged trading can make bitcoin appear too risky for inclusion in their portfolios. Reducing the influence of leverage is therefore crucial for attracting broader institutional adoption of bitcoin and other cryptocurrencies.

The details

Mitchnick refuted the notion that ETFs like BlackRock's iShares Bitcoin ETF (IBIT) are contributing to market volatility, instead pointing to perpetual futures platforms as the primary source of instability. He noted that redemptions from the IBIT fund remained minimal even during turbulent periods, while significant liquidations occurred on leveraged platforms. Despite these short-term challenges, BlackRock remains committed to digital assets as part of a broader financial evolution, anticipating a growing role for digital assets and related technologies for its clients.

  • On October 10th, a tariff-related event triggered a 20% drop in bitcoin's price.

The players

Robert Mitchnick

The head of digital assets at BlackRock.

BlackRock

An American multinational investment management corporation and one of the world's largest asset managers, with over $10 trillion in assets under management.

iShares Bitcoin ETF (IBIT)

An exchange-traded fund (ETF) launched by BlackRock that provides exposure to bitcoin.

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What they’re saying

“These days where you have a tiny little thing that shouldn't have any price impact really at all… like, for example, October 10th, some tariff-related thing, and next thing you know, [bitcoin] is down 20%. That's because you get cascading liquidations and auto-deleveraging.”

— Robert Mitchnick, Head of Digital Assets

“The facts are more on the side of how I characterized it. But now the trading data, at least lately, looks very different, and the bar to adoption if it trades like levered NASDAQ is much, much, much higher.”

— Robert Mitchnick, Head of Digital Assets

“There's a misperception out there that it's a bunch of hedge funds in ETFs that are creating volatility and selling; that's not what we're seeing. On a week that was tumultuous, obviously, in the bitcoin market, we had 0.2% of the fund redeem. If there actually were hedge funds massively unwinding trades… you would have seen billions. We saw many billions liquidated on these levered platforms.”

— Robert Mitchnick, Head of Digital Assets

What’s next

BlackRock remains committed to digital assets as part of a broader financial evolution and anticipates a growing role for digital assets and related technologies for its clients.

The takeaway

Excessive leverage in the cryptocurrency market can create instability and volatility, which could deter institutional investors who prioritize stability and risk management. Reducing the influence of leverage is crucial for attracting broader institutional adoption of bitcoin and other digital assets.