BlackRock: Bitcoin investment allocation should not exceed 2%
On December 13, 2024, news reported that BlackRock, the world's largest asset management company, pointed out in its latest report that while Bitcoin investments have their place in a diversified asset portfolio, it is recommended that investors 'underweight' it, with the best allocation in the portfolio being no more than 2%.
BlackRock's investment research institute released a report on Thursday stating that in a standard 60/40 stock and bond portfolio, allocating 1% - 2% to Bitcoin can produce a risk share similar to that of the 'seven major tech stocks', and exceeding 2% would significantly increase the overall portfolio risk. Currently, Bitcoin prices have surged, driven by Trump's election as president and nominations of pro-cryptocurrency individuals, but Bitcoin also comes with high volatility.
Although Bitcoin has a low correlation with other assets, its high volatility can provide a diversified source of risk, while over-allocating to the 'seven giants' would increase existing risks and portfolio concentration.
Since its inception in 2009, Bitcoin has experienced several significant corrections.
In January of this year, the U.S. spot Bitcoin ETF was launched, with the related fund's assets exceeding $113 billion, and nearly $10 billion flowed in after Trump's election.
BlackRock's investment research institute believes that widespread institutional investment in Bitcoin may dampen some of its volatility, although it may increase the allocation size, it could also reduce its high returns. In the future, if Bitcoin is widely adopted, investment risks may decrease, but the catalysts for significant price surges may also disappear.
