BlackRock Recommends 1 to 2% Exposure to Bitcoin ETF: Details

BlackRock, the world’s largest asset manager, has outlined an approach for investors seeking Bitcoin (BTC) exposure in a “multi-asset portfolio.”

BlackRock recommended devoting 1% to 2% of clients’ portfolios to Bitcoin Exchange-Traded Funds (ETFs).

This recommendation comes amid heightened retail and institutional adoption for Bitcoin and crypto ETFs.

BlackRock is Advertising Bitcoin ETF Products

Bloomberg Senior ETF Analyst Eric Balchunas brought the crypto community’s attention to the recent development in an X post.

He shared excerpts of a new report from BlackRock, which stated;

“In a traditional portfolio with a mix of 60% stocks and 40% bonds, those seven stocks each account for an average, about the same share of overall portfolio risk as a 1-2% allocation to Bitcoin.”

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BlackRock describes the 1-2% range as a strategic starting point for investors looking for different types of risk.

The asset manager proposed Bitcoin as an element that only partially reflects the movement of stocks and bonds.

BlackRock believes that the 1% to 2% range is adequate to represent the impact of significant tech holdings roughly.

This situation is familiar to investors who are struggling with top-heavy market indices. Beyond 2%, BlackRock warns that Bitcoin’s inherent volatility will contribute a large share of total risk, potentially overshadowing other components.

Nevertheless, BlackRock hinted that Bitcoin’s volatility profile may shift as the asset becomes more integrated into mainstream portfolios.

Also, widespread adoption from institutions could eventually temper price fluctuations, changing the asset’s returns.

BlackRock, Bitcoin and Crypto ETFs

BlackRock’s recommendation comes amid soaring momentum in its iShares Bitcoin Trust (IBIT). The ETF’s expansion has strengthened Bitcoin’s acceptance among traditional investors and reshaped debates about prudent exposure.

IBIT recently surpassed the 500,000 BTC in Assets Under Management (AUM) milestone. BlackRock’s ETF product now manages more than $50 billion in assets.

This marks a huge achievement for BlackRock, as its Bitcoin ETF product only began trading less than one year ago.

The asset manager sees Bitcoin as a viable investment instrument capable of yielding huge returns.

However, the enthusiasm surrounding the launch of other crypto ETFs, including Solana and XRP, is gradually losing steam.

US SEC Chairman Gary Gensler has expressed that he did not find some crypto products sustainable on stock exchanges.

The Donald Trump’s Influence on Crypto

Meanwhile, Bitcoin has continued on an uptrend following November’s US presidential election. Donald Trump’s victory, public endorsements, and ongoing institutional inflows saw Bitcoin surpass $100,000 in December.

As of this writing, the price of BTC is $101,422, up 1.25% in the last 24 hours.

It is important to note that Bitcoin is not the only crypto that has benefited from the euphoria surrounding Trump’s victory.

Top altcoins, including Ethereum (ETH), Solana (SOL), and XRP, are currently bullish.

Additionally, memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) have increased by 11.02% and 12.12%, respectively, in the past 30 days.

The surge in these digital assets comes amid expectations that Trump’s new administration will help establish favorable crypto policies.

There is also speculation that Trump will remove Gensler from office upon resuming office in January.