BlackRock Recommends 1-2% Bitcoin Allocation, Cites $100K Price and Magnificent Seven Comparison

Dec 12, 2024, 01:43 PM

BlackRock, the world's largest asset manager with $11.5 trillion in assets under management, has released a report recommending a 1-2% allocation of Bitcoin in multi-asset investment portfolios. The firm compares Bitcoin's risk profile to that of the 'Magnificent Seven' technology stocks, which include Apple, Amazon, Tesla, Nvidia, Meta, Google, and Microsoft, with an average market capitalization of $2.5 trillion. BlackRock views this allocation as a reasonable range for balancing portfolio diversification while managing risk, citing Bitcoin's historically low correlation with traditional markets. However, the report warns that exceeding a 2% allocation could disproportionately increase overall portfolio risk due to Bitcoin's volatility. The recommendation aligns with Bitcoin's growing institutional adoption, with BlackRock's iShares Bitcoin Trust (IBIT), which has $50.8 billion in assets under management, emerging as a significant vehicle for investment. The report also notes that Bitcoin's market capitalization, currently around $2 trillion, provides a unique diversification opportunity, though its utility differs from traditional equities. Additionally, Bitcoin's price recently surpassed $100,000, reflecting increased demand from institutional investors. BlackRock suggests that Bitcoin's volatility may evolve as it becomes more integrated into mainstream portfolios, potentially resembling gold as a tactical asset in the future.