Macroeconomic interpretation: As the cryptocurrency market continues to attract global investors' attention, the report on Bitcoin investment released by BlackRock's investment research institute serves as a stone thrown into a lake, creating ripples and providing us with a unique and highly valuable perspective for insight into the future direction of Bitcoin investment.
Today I saw a report from Reuters on the official views and investment advice from #贝莱德 . Relatively speaking, it is quite objective, mainly mentioning that institutional investment in Bitcoin may suppress some of the #BTC☀️ volatility, and it will also lower the investment returns of Bitcoin. It also suggests that if investors invest in Bitcoin, it is best not to exceed 2% of their total investment! Many in our crypto circle may have exceeded this limit. BlackRock's advice is based on #资产配置 philosophy, considering the risk characteristics of BTC, combined with stock and #债券 portfolios for diversified investment.
The core of BlackRock's official view lies in the potential impact of institutional investors on Bitcoin market volatility and returns. With broader participation of institutional investors in Bitcoin investments, it is expected to suppress some of its volatility. The logic behind this view is based on the scale of institutional funds and the characteristics of their investment strategies. Compared to retail investors, institutional investors typically have more robust financial strength and longer-term, stable investment plans. A large influx of institutional funds into the Bitcoin market will, to some extent, balance market supply and demand, reducing significant price fluctuations caused by retail investor sentiment. For example, in traditional financial markets, when large institutions gradually allocate to a new asset class, the price trend of that asset often stabilizes; trading activity remains high, but price fluctuations tend to narrow, and the Bitcoin market may exhibit a similar trend.
The volatility suppression brought by institutional participation may reduce the extraordinarily high return rate that Bitcoin has displayed since its inception. In its early days, Bitcoin experienced explosive growth in price due to a smaller number of market participants, relatively loose regulation, and its unique innovation, resulting in astonishing returns. However, with the entry of institutions, the market is gradually maturing, and the price discovery mechanism is becoming more effective. Its price growth pattern may approach that of traditional assets, with returns tending to stabilize and decline. This is similar to emerging tech companies that may achieve rapid performance growth in their early stages due to unique technologies or business models, but as industry competition intensifies and giants enter the market, their growth rates gradually revert to the industry average.
Looking ahead to the future of Bitcoin, if it achieves widespread adoption, BlackRock believes that investing in it may become less risky. Widespread adoption means that Bitcoin gains broader recognition and application in areas such as payments and value storage, with a more solid market foundation and enhanced price stability, similar to how gold transitioned from a common metal to a globally recognized safe-haven asset. However, at the same time, Bitcoin may lose structural catalysts for further significant price increases. In its early development, Bitcoin had strong upward momentum due to technological innovation, rapid market recognition, and regulatory arbitrage opportunities. Once widely accepted, these special factors driving its significant rise will gradually disappear, and price growth will rely more on asset allocation demand under the macroeconomic environment and the natural inflation level of the market.
BlackRock advises investors not to exceed 2% of their total investment in Bitcoin, a suggestion stemming from its mature asset allocation philosophy. From the perspective of modern portfolio theory, Bitcoin, as a high-risk, high-volatility asset, should occupy an appropriate proportion in the investment portfolio to balance overall risk and return. For cryptocurrency market investors, many may exceed this proportion, reflecting the risk preference characteristics of the cryptocurrency investor group and the irrational exuberance at the early stage of market development. In emerging markets, investors are often easily attracted by high return expectations, over-allocating to a hot asset while neglecting potential risks. BlackRock's suggestion is aimed at helping investors build a more robust and diversified investment portfolio from a macro asset allocation perspective, avoiding significant losses due to the excessive volatility of a single asset.
Bitcoin investment is at a critical crossroads. On one hand, the entry of institutional investors signifies a maturation and standardization of the market, with volatility expected to be somewhat controlled; on the other hand, this may also mean the gradual end of the high return era for Bitcoin investments. For investors, BlackRock's perspective provides a rational framework for examining Bitcoin investments, which should not only focus on its past high-return myths but also consider the profound impacts brought about by changes in market structure. Investment decisions should pay more attention to the scientific and reasonable nature of asset allocation, incorporating Bitcoin as part of a diversified investment portfolio, rather than relying solely on it for excess returns. This approach will help navigate the ever-changing tides of the financial market steadily, seizing investment opportunities while effectively managing risks.
BTC historical return data: According to data statistics, BTC's monthly and quarterly historical return rates from 2013 to this year over the past twelve years are as above, which can serve as a reference for medium to long-term asset allocation.
