AE can support the author: 👉Donate: 333503619. Thanks
BlackRock stated that an allocation of up to 2% in Bitcoin is ‘a reasonable range’
The $11.5 trillion asset management company BlackRock recently stated that an allocation of up to 2% in Bitcoin is a ‘reasonable range’ for a multi-asset portfolio. The world's largest asset management firm noted that the leading cryptocurrency is gaining increasing prominence in modern investing, according to a Bloomberg report.
BlackRock is currently running the world's latest Spot Bitcoin ETF. Launched in January, it quickly became popular, with data showing over $6 billion in new investments flowing into the cryptocurrency-based investment vehicle just this week. BlackRock's iShares Bitcoin Trust (IBIT) has dominated those products, recently surpassing 500,000 BTC.
BlackRock offers investors Bitcoin design in the context of rising BTC prices
This has been an unforgettable year for Bitcoin. The asset has soared since January but reached new highs in November. Specifically, Donald Trump's re-election saw the asset surge to new heights, hitting six-figure prices for the first time in history.
However, it could only reach that milestone thanks to increasing attention throughout the year. A significant part of that is BlackRock, as this asset management company emerged as one of the first 11 companies to launch a Spot Bitcoin ETF. Now, the company has recently shared how investors can best manage their investment in the leading cryptocurrency.
BlackRock has stated that an allocation of up to 2% in Bitcoin is a ‘reasonable range’ in a recent report. The company noted that such an investment carries the same risk in a 60/40 portfolio as the Magnificent Seven stocks. Furthermore, the asset management company ensures that any investment above 2% would pose significantly higher risks.
Although BTC has yielded huge returns in 2024, it also comes with inherent risks. The volatility of the asset is the main reason why the ‘risk budget’ has become an important part of the strategy, the report stated.
“Although the correlation of Bitcoin with other assets is relatively low, it is more volatile, making its impact on the overall risk contribution generally similar,” the article added. “Allocating Bitcoin will have the advantage of providing a source of diversified risk, while over-allocating to the Magnificent Seven will further increase existing risks and concentrate the portfolio.”