According to Odaily Planet Daily, BlackRock released a report (Bitcoin: A Unique Diversified Asset) to analyze the role of Bitcoin in an investment portfolio and emphasize its potential as a unique asset for diversified investment.
Bitcoin is described as a "global, decentralized, non-sovereign asset with a fixed supply" that is distinct from traditional financial assets. Despite its high volatility and short history, its adoption continues to grow.
Bitcoin has long exhibited low correlation with stocks and bonds, and while price movements occasionally sync with traditional risk assets in the short term, these are believed to be temporary phenomena.
Bitcoin is considered a risky asset due to its high volatility and susceptibility to regulatory changes, market sentiment and technological developments, but its decentralized nature makes it immune to the macroeconomic forces that impact traditional assets.
The report pointed out that global monetary instability, fiscal sustainability and increased geopolitical tensions may drive the growth of Bitcoin's value, and its fixed supply and decentralized, borderless nature may increase future demand.
Bitcoin shows the potential to enhance diversification when included in a portfolio in modest proportions, but larger allocations can significantly increase portfolio volatility.
The report concludes that Bitcoin’s unique characteristics could make it a risk hedging tool that traditional assets cannot cope with, especially in the context of increased geopolitical and economic uncertainty.
