- BlackRock adds Bitcoin ETF to model portfolios with a 1-2% allocation for the first time in its investment strategy.
- Bitcoin ETFs face outflows but BlackRock sees long-term value and expands its crypto investment offerings in Europe.
- BlackRock adjusts equity and bond positions while integrating Bitcoin to diversify and balance portfolio risks.
BlackRock, the world’s largest asset manager, has added Bitcoin to its model portfolios for the first time. The firm will allocate 1% to 2% of its $150 billion model-portfolio universe to the iShares Bitcoin Trust ETF (IBIT).
This decision integrates Bitcoin into BlackRock’s target allocation portfolios, which include alternative assets. These portfolios combine various funds into structured investment strategies. Financial advisers frequently use them, influencing fund flows significantly.
Bitcoin’s Role in BlackRock’s Strategy
The addition of Bitcoin signals its increasing function as a portfolio diversification option. According to BlackRock, Bitcoin demonstrates investment viability through its ability to improve portfolio performance over time. The restricted allocation of Bitcoin stems from its volatility which introduces investment risks.
Market Trends and Investor Sentiment
The iShares Bitcoin Trust ETF launched in January 2024 and quickly attracted over $37 billion. However, investor sentiment has weakened. Over the past week, IBIT recorded $900 million in outflows, reflecting cautious market behavior.
Bitcoin ETFs, including those from Fidelity, Ark 21Shares, Invesco, Franklin, and Grayscale, experienced seven consecutive days of outflows. On February 26 alone, total withdrawals reached $756 million, with IBIT shedding 5,000 BTC. Despite this trend, demand for Bitcoin exposure within BlackRock’s model portfolios remains strong.
Portfolio Adjustments and Broader Investment Strategy
BlackRock has also adjusted other allocations. The firm reduced its overweight position in equities from 4% to 3% due to cooling earnings expectations. It also scaled back exposure to long-duration bonds within fixed-income strategies.
Meanwhile, the company is expanding its Bitcoin investment offerings. The company is preparing to launch an exchange-traded Bitcoin product in Europe. The demand for Bitcoin exchange-traded funds continues to increase as U.S. Bitcoin ETFs attracted $35 billion in investment inflows in 2024.
BlackRock’s Bitcoin allocation signals a shift in institutional investment strategies. Despite market volatility, the firm sees long-term value in Bitcoin as a portfolio diversifier.
