An investor at a laptop with physical Bitcoin coins and cash while weighing portfolio risk

BlackRock Says Bitcoin Still Earns a Portfolio Role After a 53% Drawdown

By Isaac • September 2, 2026 11:22 pm • Comments

Bitcoin investors can end up at nearly the same destination as stock investors while taking a radically rougher road to get there.

That is the uncomfortable lesson in a fresh comparison between BlackRock’s iShares Bitcoin Trust and a broad S&P 500 fund.

Through August 31, IBIT held a narrow total-return lead since its January 2024 launch. Bitcoin ETF holders had to absorb a drawdown of more than 53% along the way.

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BlackRock’s conclusion is not that Bitcoin has failed. The asset manager says a measured allocation can still improve the risk-adjusted performance of a traditional portfolio.

CryptoSlate calculated that IBIT returned 67.74% from its January 11, 2024 debut through August 31, 2026, while Vanguard’s S&P 500 ETF returned 66.14% with dividends reinvested, leaving the Bitcoin fund ahead by only 1.60 percentage points. The path to those similar results was dramatically different: IBIT’s worst peak-to-trough slide reached 53.30% between October 6, 2025 and June 30, 2026, compared with an 18.69% maximum decline for the stock fund during the measured period, so investors who bought both at IBIT’s launch reached roughly the same destination after enduring nearly three times the drawdown in the Bitcoin vehicle.

Headline returns hide that difference. Looking only at the start and finish misses the collapse of more than half from IBIT’s peak before the recovery rebuilt much of the lost ground.

BlackRock’s Re-Underwriting Bitcoin analysis argues that the selloff reflected crypto-native deleveraging and shifting investor flows more than a breakdown in Bitcoin’s long-term case, identifying a historically leveraged futures market where perpetual contracts outside the CME accounted for most open interest near the peak. The asset manager also noted that spot Bitcoin products attracted roughly $60 billion from their US launch through October 2025 and then recorded about $5 billion in aggregate outflows, while AI-themed funds drew more than $46 billion; against that backdrop, BlackRock still found that a modest 1% to 2% Bitcoin allocation improved risk-adjusted results in a historical 60/40 portfolio test.

The report’s liquidation argument drew immediate attention:

When prices turned, forced liquidations amplified the decline. Changing institutional demand added pressure as money moved away from Bitcoin products and toward the AI trade.

The market backdrop adds perspective. Bitcoin traded near $47,000 when US spot ETFs launched, climbed above $120,000 in 2025 and then fell below $60,000 before recovering toward the upper-$70,000 range.

CCN summarized BlackRock’s ten-year portfolio test in concrete terms: a traditional 60% stock and 40% bond mix produced a Sharpe ratio of 0.81, while adding 1% Bitcoin raised it to 0.90 and a 2% allocation lifted it to 0.96 in the hypothetical historical analysis. The maximum drawdown moved only slightly, from 20.3% for the original portfolio to 20.9% with the 2% Bitcoin position, while the larger allocation generated 1.85% alpha; historical results can break down in the next cycle, yet the test explains why BlackRock can acknowledge Bitcoin’s violent losses and still argue for a tightly controlled position.

The allocation math was also quickly circulated:

The improvement did not require making Bitcoin the portfolio’s center of gravity. A small position can contribute upside and diversification while limiting how much a severe crypto drawdown damages the whole portfolio.

BlackRock measured Bitcoin’s ten-year correlation with the S&P 500 at 0.18. The asset can trade like a risk-on instrument during a liquidation event, but over longer periods its behavior has remained distinct enough to offer diversification.

None of this turns Bitcoin into a low-risk holding, and historical simulations do not guarantee future returns. The comparison makes the risk harder to ignore: IBIT’s slight edge over the stock market required investors to tolerate nearly three times the maximum drawdown.

The practical takeaway is sharper than either a bullish slogan or a warning to stay away. Bitcoin may still earn a place in a conventional portfolio, but position sizing is the difference between using its volatility and being controlled by it.

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