According to a report by Bloomberg, asset management giant BlackRock noted in its latest report (Positioning Bitcoin in Portfolios) that for investors looking to hold Bitcoin exposure, allocating 1-2% of their portfolio is a reasonable range.
1-2% allocation in the portfolio is reasonable.
Meanwhile, according to BlackRock, allocating 1-2% of funds to Bitcoin in a portfolio consisting of 60% stocks and 40% fixed income assets has a risk impact on the overall portfolio that is, on average, similar to the risk impact of allocating funds to 'Seven Giants' tech stocks (such as large tech companies like Google, Apple, etc.).
According to BlackRock, investors need to view Bitcoin's expected returns in a different light:
It lacks a fundamental cash flow to estimate future returns, the key is its degree of adoption.
BlackRock also pointed out that Bitcoin may offer a more diversified source of returns. It further stated
In the long run, we believe that Bitcoin's value is driven by completely different factors, so there is no inherent reason to suggest that Bitcoin should be highly correlated with major risk assets.
From a longer-term perspective, Bitcoin may become less risky, but by then it may also no longer have structural catalysts to drive significant price increases. Instead, by that time, investors may be more inclined to strategically use it as a tool to hedge specific risks, similar to gold.
Not focusing on altcoin ETFs.
Since BlackRock launched the Bitcoin ETF, Bitcoin has entered a new phase. After this, issuers have also begun to actively apply for various altcoin ETFs, hoping to provide more cryptocurrency investment options in traditional financial markets. Currently, many altcoin ETF issuers are seeking approval from the U.S. Securities and Exchange Commission. However, BlackRock is not one of them.
According to information shared by Bloomberg analyst Eric Balchunas, the agency's executive Jay Jacobs stated during a talk in ETFs in Depth:
We are really just scratching the surface of Bitcoin, especially Ethereum. Currently, only a very small number of clients hold IBIT (Bitcoin ETF) and ETHA (Ethereum ETF), which is our focus (as opposed to launching new altcoin ETFs).
Furthermore, according to previous reports by Zombit, Fox Business reporter Eleanor Terrett had disclosed that during the current government's administration, the SEC may not approve any new cryptocurrency ETF applications.
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