- BlackRock advises a 1-2% Bitcoin allocation in multi-asset portfolios, balancing diversification and risk.
- BlackRock’s IBIT leads the market with $53.8 billion in assets, holding nearly half of all spot Bitcoin ETF reserves.
- Banks like Goldman Sachs and governments in the U.S. and Canada explore greater Bitcoin adoption amid regulatory shifts.
The world’s biggest asset manager with $11.5tn in assets under management, BlackRock, has for the first time called on investors to purchase bitcoin. The firm’s latest report said that investors should allocate 1-2% of their diverse portfolios to BTC. This comes when spot bitcoin exchange-traded funds (ETFs) have actually come into existence. They currently have more than $113 Billion in AUM.
BlackRock’s report highlights that a 1-2% Bitcoin allocation offers a balanced approach to incorporating the digital asset into a diversified portfolio. The firm emphasized that exceeding this range could disproportionately increase portfolio risk. The guide links Bitcoin’s incorporation with BlackRock’s model of a 60/40 equity/bond breakdown.
The manager suggested that investors add to their equity in large-cap technology names such as Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. Most of them were provided as an addition to the consideration of Bitcoin as a portfolio play. These companies are known as the “Magnificent 7”.
Spot Bitcoin ETFs
BlackRock has the Bitcoin spot ETF, IBIT, which holds $53.8 billion in the market representing 45% of the bitcoins stored in spot ETFs worldwide. These funds collectively hold over 1.104 million BTC, surpassing the estimated holdings of Bitcoin’s pseudonymous creator, Satoshi Nakamoto.
As interest in Bitcoin and related ETFs grows, BlackRock’s recommendation addresses increasing inquiries from investors about optimal allocation sizes. Bloomberg analyst Eric Balchunas noted that the report likely serves to clarify such questions, given the firm’s leadership.
Growing Institutional Interest in Bitcoin
BlackRock’s recommendation reflects a broader trend of increasing institutional interest in Bitcoin. Banks like Goldman Sachs have signaled plans to expand their investments in Bitcoin ETFs, while governments in the U.S., Brazil, and Canada are exploring legislation to establish Bitcoin reserves.
The report aligns with market sentiment anticipating higher demand for Bitcoin under a potential pro-crypto administration led by Donald Trump. BlackRock’s position as a pioneer in the ETF market places it at the center with Coinbase Custody safeguarding the firm’s Bitcoin holdings.
