Catenaa, Sunday, December 15, 2024- BlackRock, the world’s largest asset manager, has advised investors to keep Bitcoin exposure in portfolios between 1-2% due to its volatility and risk profile, according to a new report.
The guidance comes as BlackRock’s iShares Bitcoin Trust ETF has outpaced its gold counterpart, managing $53.8 billion in assets since its launch in January.
The report, authored by senior executives including Samara Cohen and Vivek Paul, compares Bitcoin investments to tech stocks—offering potential upside but with inherent risks. “Bitcoin has seen both major surges and selloffs,” it states. “This volatility and lack of underlying cash flows make adoption the primary driver of its price.”
BlackRock also highlighted that while future adoption could reduce Bitcoin’s risk, it may diminish opportunities for substantial price increases. The firm’s Bitcoin ETF has attracted record investments, surpassing its iShares Gold ETF in net assets—a milestone for the asset manager, which previously labeled Bitcoin an “inflation hedge.”
Despite BlackRock’s endorsement, broader institutional acceptance remains uneven. Microsoft shareholders, for instance, recently voted overwhelmingly against investing in Bitcoin, with less than 1% supporting the proposal.
BlackRock, which shocked markets last year by filing for a Bitcoin ETF, has since led the pack in crypto ETFs, securing SEC approval alongside 10 other funds in January. While BlackRock isn’t encouraging all investors to adopt Bitcoin, the report underscores its growing role in diversified portfolios amid economic uncertainty.
