Bitcoin (BTC 0.60%) has been a popular investment with retail investors for many years. Although it has earned a reputation for being a risky and speculative investment that isn't suitable for most investors, over time, more people have warmed up to the idea of holding it in their portfolios, particularly as Bitcoin has become less volatile.
One notable financial leader who has changed his opinion of Bitcoin recently is BlackRock Chief Executive Officer Larry Fink. While in the past he appeared to be dismissive of the leading cryptocurrency, he now sees why investors may want to hold it in their portfolios.
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Bitcoin as an "asset of fear"
During a recent press event, Fink referred to Bitcoin as an "asset of fear," suggesting that people buy it for safety reasons. "You own Bitcoin because you're frightened of your physical security. You own it because you're frightened of your financial security." Back in 2017, however, he believed it was primarily for criminals looking to launder money.
Fink's comments reinforce the growing acceptance of Bitcoin as a justifiable asset for investors to hold in their portfolios as a way to diversify and perhaps reduce their overall risk in the market. It soared in 2025 to record levels, even though there were question marks about the economy. Thus, you could see a possible correlation between fear and a rise in Bitcoin's value.
Fear doesn't always translate into a rising price for Bitcoin
The problem I see with Fink's statement is that Bitcoin really hasn't proven to be the type of safe investment that investors turn to when they're worried about the market. If that were the case, you'd expect to see evidence of an inverse relationship with the S&P 500 in troubling times. When the broad index is struggling, Bitcoin should be doing better -- if it's truly an asset that people go to in times of trouble, similar to gold.
But that hasn't been the case. In 2022, the S&P 500 crashed by 19% due to economic uncertainty, rising inflation, and various macroeconomic issues. Investors didn't pivot to Bitcoin out of fear. Instead, they dumped it, in droves. The cryptocurrency fell by a whopping 65% that year. You can also look to the last quarter of 2025, as the S&P 500 briefly experienced a slowdown that it would end up recovering from. During that quarter, it ended up rising by 2% while Bitcoin nosedived by 23%. The returns don't seem to back up the idea that fear is the positive catalyst for Bitcoin that Fink and other investors suggest it might be.
CRYPTO: BTC
Key Data Points
Bitcoin has matured, but it's still incredibly risky
Bitcoin has risen in popularity over the years, and it's clearly won over many retail investors. But that doesn't mean that it's become a safe asset to hold in your portfolio. Diversifying for the sake of diversifying and simply holding different types of assets may not necessarily protect you in a downturn. As Bitcoin's performance in 2022 shows, it can potentially add to your overall risk and introduce a new problem you may not have had to worry about before -- volatile crypto markets.
Ultimately, Bitcoin remains a highly speculative asset whose valuation is difficult to tie to any metric, and that makes it difficult to predict how it will perform in the future. That's why I believe the vast majority of investors are better off avoiding it.
If you're bullish on crypto and can stomach the volatility that comes with Bitcoin and are OK with the risk, then it could make sense to hold a small position in your portfolio. But just because more smart people appear to be talking favorably about it (perhaps because they don't want to seem disconnected with retail investors), it doesn't mean that it's become a safer asset to hold, or that it can reduce your portfolio's risk in any way.
