$11.5 trillion asset manager BlackRock has recently said that up to 2% allocation in Bitcoin is a “reasonable range” for multi-asset portfolios. Indeed, the largest asset manager on the planet has noted that the leading cryptocurrency has a growing place in modern investment, according to a Bloomberg report.
BlackRock currently runs the latest Spot Bitcoin ETF on the planet. Launched in January, it quickly rose to prominence, with data showing more than $6 billion in new investments has entered the crypto-based investment vehicle this week alone. BlackRock’s iShares Bitcoin Trust (IBIT) has dominated those products, recently surpassing 500,000 BTC.
JUST IN: BlackRock says up to 2% #Bitcoin allocation is “reasonable range.”
— Watcher.Guru (@WatcherGuru) December 12, 2024
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It has been an unforgettable year for Bitcoin. The asset has been surging since January but reached new heights in November. Specifically, the reelection of Donald Trump has seen the asset surge to new heights, reaching a six-figure price for the first time in its history.
Yet, it was only able to reach that mark due to the increased attention it got throughout the year. A massive part of that was BlackRock, as the asset manager emerged as one of the initial 11 to issue a Spot Bitcoin ETF. Now, the firm has recently shared how investors can best manage investment in the leading cryptocurrency.
Also Read: BlackRock’s Spot Bitcoin ETF Surpasses Its Gold ETF in First Year
BlackRock has said that up to 2% allocation into Bitcoin is a “reasonable range” in a new Investment Institute paper Indeed, the firm notes that such an investment carries the same risk in a 60/40 portfolio as a Magnificent Seven stock. Moreover, the asset manager assures any investment above 2% would drive the risk much higher.
Even though BTC has brought with it mammoth returns in 2024, it also comes with inherent risks. The volatility of the asset is the prime reason why “risk budgeting” is an important part of the strategy, the paper says.
“Even though Bitcoin’s correlation to other assets is relatively low, it’s more volatile, making its effect on total risk contributions similar overall,” the paper added. “A Bitcoin allocation would have the advantage of providing a diverse source of risk, while an overweight to the MAginfcent 7 would add to existing risk and to portfolio concentration.”
