According to a tweet by Bloomberg ETF analyst Eric Balchunas, asset management giant BlackRock, which is also the issuer of the Bitcoin spot ETF IBIT, advises clients to hold a 1-2% Bitcoin position in their diversified portfolios.
When compared to the seven major stocks, Bitcoin should account for 1-2% of the asset allocation.
Another analyst, James Seyffart, also pointed out that BlackRock must have received a large number of inquiries from clients, and their latest report employs a risk budget approach for Bitcoin allocation.
Bitcoin is difficult to compare with traditional assets due to its high volatility (yellow line in the chart below) and low correlation with stocks (red line in the chart below). For traditional investors with a stock-to-bond ratio of 60:40 in their asset allocation, a 1-2% allocation to Bitcoin seems reasonable when compared to the proportion of the seven giants in the U.S. stock market (magnificent 7).
Note: magnificent 7 refers to Microsoft, Amazon, Meta, Alphabet, Apple, Tesla, and Nvidia. These seven companies account for 35% of the S&P 500's constituent weight, with a total market capitalization of up to $18 trillion.
BlackRock's IBIT has a market capitalization of $53.4 billion.
The Bitcoin spot ETF IBIT launched by BlackRock is currently the largest Bitcoin ETF by market capitalization, having attracted $35.5 billion in inflows since its launch at the beginning of the year, with a net asset value reaching $53.4 billion, accounting for 2.7% of Bitcoin's total market capitalization.
In fact, Grayscale's Bitcoin fund GBTC has been around for years, having applied multiple times to convert to an ETF, only to be rejected by the U.S. Securities and Exchange Commission (SEC). It wasn't until BlackRock's involvement that the ETF trend officially materialized. BlackRock's participation has allowed more traditional investors and institutions to better understand Bitcoin, and they now have the opportunity to invest in Bitcoin directly through traditional stock accounts.
Now, BlackRock directly recommends an asset allocation of 1-2% for investment, indicating that IBIT has significantly contributed to BlackRock's performance this year, and it is believed that this will also give general investors more confidence to invest in Bitcoin.
This article discusses BlackRock's recommendation for clients to hold 1-2% of Bitcoin in a diversified portfolio, first appearing in Chain News ABMedia.
