The post BlackRock Suggests a 1-2% Bitcoin Allocation: A Calculated Bet for Investors appeared on BitcoinEthereumNews.com.

BlackRock, the largest asset manager globally, with an impressive $11.5 trillion under management, has proposed a modest Bitcoin allocation of 1-2% for portfolios. According to BlackRock, this allocation range is a balanced approach for those seeking exposure to the cryptocurrency without taking excessive risks. In a report titled “Sizing Bitcoin in Portfolios,” published on December 12, BlackRock highlighted that this percentage allocation carries a similar level of portfolio risk as investing in leading tech stocks, including giants like Amazon, Microsoft, and Nvidia. These companies belong to what the report calls the “magnificent 7,” a group of mega-cap tech players. The report warns against exceeding this suggested range, stating that larger allocations could drastically increase Bitcoin’s risk contribution to a diversified portfolio. While Bitcoin offers unique opportunities, investors must tread carefully when deciding how much of their portfolio to commit. Bitcoin’s Value Hinges on Adoption, Not Cash Flows BlackRock’s report shifts focus from traditional valuation metrics, emphasizing that Bitcoin lacks cash flows to predict future returns. Instead, its long-term value is rooted in adoption trends and its role as a diversified asset. “Bitcoin may also provide a more diversified source of return,” the report explains. The company adds that over time, Bitcoin’s correlation with major risk assets might decline due to its distinct drivers of value. This unique positioning makes Bitcoin a potentially compelling hedge against specific risks akin to gold. However, BlackRock cautions that Bitcoin’s risk profile could diminish as adoption grows, potentially leading to fewer structural price catalysts. The cryptocurrency might then evolve into a more tactical investment rather than a driver of high returns. Institutional interest in Bitcoin has surged in 2024, driven largely by the growing popularity of spot Bitcoin ETFs. These funds, which debuted in January, crossed $100 billion in net assets by November, marking a…

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Filed under: News - @ December 15, 2024 12:29 pm