Financial analysis reports from reputable financial institutions or research agencies

BlackRock Recommends 1-2% Bitcoin Allocation, Citing Diversification Benefits

Dec 12, 2024, 08:57 PM

BlackRock Inc., the world's largest asset manager with $11.5 trillion in assets under management, has recommended that investors consider allocating 1% to 2% of their portfolio to Bitcoin. This recommendation comes from a report titled 'Sizing Bitcoin in Portfolios' by the BlackRock Investment Institute, which compares the risk profile of Bitcoin to that of the 'Magnificent Seven' mega-cap tech stocks like Apple, Amazon, and Microsoft. The report suggests that this allocation range would provide a similar level of risk exposure as holding these tech giants in a traditional 60/40 stock/bond portfolio. BlackRock's analysis points out that while Bitcoin's volatility is high, its low correlation with other asset classes could offer diversification benefits. However, the firm cautions that exceeding a 2% allocation would significantly increase Bitcoin's contribution to overall portfolio risk. This recommendation reflects BlackRock's growing involvement in cryptocurrency, highlighted by its management of the largest Bitcoin ETF, the iShares Bitcoin Trust (IBIT), which holds nearly $54 billion in assets. Bitcoin's price has recently surpassed $100,000, and its adoption potential remains a key factor in its investment case.