Robbie Mitchnick, Global Head of Digital Assets at BlackRock (NASDAQ:BLK), said a potential U.S. recession could act as a powerful driver for Bitcoin‘s (CRYPTO: BTC) next bull cycle, citing liquidity injections and fiscal responses as key catalysts.

What Happened: Speaking with Yahoo Finance on Wednesday, Mitchnick explained that while Bitcoin has historically been perceived as “digital gold,” recent price action has fallen short of this reputation.

Despite some optimism following policy shifts in Washington, Bitcoin’s performance has been subdued, currently hovering near $83,550 after giving back its late-2024 rally gains.

“The crypto market may have gotten ahead of itself with expectations about how fast deregulation and other catalysts would arrive,” Mitchnick said.

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He noted that while Bitcoin rose sharply into the end of 2024, the early part of 2025 has been marked by modest ETF outflows and cautious sentiment.

Mitchnick argued that Bitcoin’s fundamental characteristics—its scarcity, decentralization, and independence from traditional monetary systems—position it as a long-term hedge, especially during periods of economic stress.

“A recession would be a big catalyst for Bitcoin,” he said.

“It’s long liquidity, meaning it benefits from increased fiscal spending, deficit accumulation, and lower interest rates—all typical features of a recessionary environment.”

While gold has recently surged to record highs amid growing economic uncertainty, Bitcoin has struggled to mirror that trend.

Mitchnick attributed this partially to short-term correlations and how the crypto market narrative has leaned into viewing Bitcoin as a “risk-on” asset.

“There’s a self-fulfilling element to how Bitcoin is being traded in the short term,” he noted.

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Why It Matters: He also discussed ETF market dynamics, highlighting that recent Bitcoin ETF outflows have been driven primarily by hedge funds unwinding spot-futures arbitrage trades.

“The core long-term holders are still in,” he explained, pointing to continued interest from institutional investors despite the volatile price action.