The world’s largest asset manager, BlackRock, has changed its official outlook on Bitcoin, now referring to it as a global currency alternative. This was stated by Jay Jacobs, BlackRock’s US head of thematic and active ETFs, during a recent digital assets conference, where he outlined Bitcoin’s characteristics in comparison to conventional financial assets such as US gold and Treasury bonds.

The key findings of the presentation indicate that, in contrast to the variable supply of US markets, BlackRock considers the supply of Bitcoin to be fixed. US Treasury bonds and the supply of gold are somewhat fixed. But in contrast to the relatively low volatility of US stocks, Bitcoin's remains high.

Bitcoin’s short track record, in contrast to the medium and long histories of gold and Treasury bonds, is another significant distinction. However, Bitcoin differs from the U.S. currency in that it is a decentralized asset similar to gold’s monetary reserves. The second section of the presentation focused on Bitcoin’s volatility and its relationships to other assets, especially gold and stocks.

Since Bitcoin and the stock market have little historical correlation, Bitcoin is a desirable portfolio diversifier. Although highly volatile, its volatility has decreased over time, contributing to its increasing maturity in the market. The last section focused on the potential effects that even modest Bitcoin holdings could have on a conventional portfolio.

Scenarios were proposed where Bitcoin was allocated between 1% and 5% of the portfolio. The results indicated that despite higher volatility, portfolios holding Bitcoin experienced better returns and risk-adjusted metrics. Better returns are achieved with higher Bitcoin allocations, but risk parameters such as drawdowns are more pronounced.