BlackRock is delivering a clear message to investors: long-term government bonds can no longer be counted on as the reliable shock absorber they once were. As fiscal pressures rise and policy decisions trigger sudden market moves, the world’s largest asset manager says the traditional role of sovereign debt in portfolios is starting to break down. That shift is forcing investors to rethink where they seek protection—and for some, major cryptocurrencies are now part of that conversation.
In its latest weekly commentary, the BlackRock Investment Institute argues that government bonds are losing their status as portfolio “ballast.” Persistent budget deficits, heavy debt issuance, and interest rates staying higher for longer have made long-duration bonds more fragile. Instead of offsetting equity losses during periods of stress, bond selloffs are increasingly happening at the same time as risk assets decline.
According to the team led by Jean Boivin, these moves aren’t just about inflation or economic growth anymore. Politics and policy shocks are playing a bigger role, colliding with what BlackRock calls “immutable” constraints—especially the need for foreign investors to keep buying rising volumes of government debt. When that demand weakens, bonds stop acting as a hedge and start behaving like another source of risk.
Japan offers a real-world example of this problem. Ultra-long Japanese government bonds sold off sharply this month, pushing the 40-year yield briefly above 4%. That level hadn’t been seen since the maturity was first introduced in 2007. The move reflected growing concern over Japan’s fiscal outlook and highlighted how quickly confidence can shift in sovereign markets.
BlackRock says it has been tactically underweight long-term Japanese government bonds since 2023. More recently, in December 2025, the firm also moved underweight on long-term U.S. Treasuries, pointing to rising government issuance and expectations of increased corporate bond supply in 2026.
The broader conclusion is blunt: the classic 60/40 portfolio model—mixing stocks and bonds for balance—is under strain. When policy shocks, rather than recessions alone, drive bond losses, fixed income can no longer be assumed to stabilize portfolios.
This rethink is happening just as major cryptocurrencies are trading close to cycle highs. Bitcoin is currently around $88,184, down roughly 1.2% over the past 24 hours, with daily trading volume above $43.5 billion and a market capitalization near $1.76 trillion. Ethereum is trading near $2,953, with about $23.4 billion in 24-hour volume and a daily dip of around 1–1.5%. Solana is hovering around $199.15, essentially flat, with a modest 0.22% decline over the last day.
Against a backdrop where bonds no longer provide dependable protection, some institutions are starting to view Bitcoin, Ethereum, and Solana as the place for “convex” risk exposure—the role sovereign debt once played. The choice is becoming clearer: accept growing duration risk in increasingly politicized bond markets, or embrace the visible volatility of crypto assets, where risk is openly priced rather than assumed away.
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