BlackRock recommends clients hold 1-2% BTC in diversified investment portfolios

According to Eric Balchunas, ETF analyst at Bloomberg, BlackRock, the asset management giant and issuer of BTCSpot ETF IBIT, recommends that its clients hold 1-2% of BTC positions in their diversified investment portfolios.

Compared with the seven giant stocks, BTC should account for 1-2% of asset allocation.

Another analyst, James Seyffart, also pointed out that BlackRock must have received a lot of inquiries from clients, and its latest report uses a risk budget approach as the basis for BTC allocation.

BTC is difficult to compare with traditional assets, with high volatility (yellow line below) and low correlation with stocks (red line below). For the asset allocation investors of traditional stocks, 1~2% seems to be a reasonable number for BTC if compared with the proportion of the magnificent 7 in their total assets.

Note: Magnificent 7 refers to Microsoft, Amazon, Meta, Alphabet, Apple, Tesla, and Nvidia. These seven companies account for 35% of the S&P 500 component stocks’ weight, with a market value of up to $18 trillion.

BlackRock IBIT has a market value of $53.4 billion.

BlackRock issuance’s BTCSpot ETF IBIT is currently the largest BTC ETF by market capitalization, attracting $35.5 billion in inflows since the beginning of the year, with a net asset value of $53.4 billion, accounting for 2.7% of BTC’s total market capitalization.

In fact, Grayscale’s BTC fund GBTC has been in place for many years, and its repeated applications to transform into ETFs were rejected by the U.S. Securities and Exchange Commission (SEC) until BlackRock joined, making this ETF trend officially realized. BlackRock’s addition allows more traditional investors and institutions to learn more about BTC, and also has the opportunity to invest directly in BTC through traditional stock accounts.

Now BlackRock directly gives 1~2% asset investment allocation advice, it is conceivable that IBIT has brought a lot of attention to BlackRock’s performance this year, and I believe it will also make ordinary investors more confident to invest in BTC.

This article by BlackRock advises clients to hold 1-2% of BTC in a diversified portfolio first appeared on Chain News ABMedia.