Asset management giant BlackRock is reportedly promoting Bitcoin (BTC) as a part of a balanced portfolio.
According to a new report by Bloomberg, BlackRock – which has over $10 trillion in assets under its management – released a new research paper saying that a 2% allocation of the top crypto asset by market cap in multi-asset portfolios is “reasonable.”
Furthermore, BlackRock says investors weighing their portfolios with 1% or 2% BTC would “produce a similar risk profile to the so-called Magnificent Seven technology stocks in a standard 60/40 portfolio of stocks and bonds.”
However, the asset management firm also warns that portfolios with over 2% of the crypto king would “sharply increase” their risk.
As stated by Samara Cowen and the paper’s other authors, according to Bloomberg,
“Even though Bitcoin’s correlation to other assets is relatively low, it’s more volatile, making its effect on total risk contribution similar overall. A Bitcoin allocation would have the advantage of providing a diverse source of risk, while an overweight to the Magnificent 7 would add to existing risk and to portfolio concentration.”
The Magnificent Seven includes tech giants that have seen massive gains over the last decade, including Google, Amazon, Tesla, Microsoft, and Nvidia.
According to the paper’s authors, Bitcoin will eventually become less volatile once blue-chip institutions adopt it. However, this could also slow down its explosive upswings.
“Looking ahead, should Bitcoin indeed achieve broad adoption, it could potentially also become less risky – but at that point it might no longer have a structural catalyst for further sizable price increases.”
Bitcoin is trading for $101,573 at time of writing, a 1.1% decrease during the last day.
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Mehron Rokhy
https://dailyhodl.com/2024/12/12/financial-giant-blackrock-endorses-up-to-2-bitcoin-btc-allocation-in-multi-asset-portfolios-report/
2024-12-12 19:41:14
