Bitcoin is ‘Digital Gold’ with 1-2% Portfolio Fit

• The Thesis: BlackRock defines Bitcoin as a “Store of Value” (Digital Gold), distinct from stablecoins which now dominate the payments sector.
• The Math: A 1-2% portfolio allocation provides optimal diversification, balancing Bitcoin’s high volatility with its low long-term correlation to stocks.
• The Shift: A demographic divide is driving adoption; younger investors overwhelmingly favor Bitcoin over gold, signaling a long-term capital rotation.

BlackRock, the world’s largest asset manager, has formally delineated its thesis for digital assets, categorizing Bitcoin as a “sovereign store of value” while ceding the payments utility narrative to stablecoins. Robbie Mitchnick, Head of Digital Assets, outlined the firm’s quantitative approach this week, framing Bitcoin not as a tech stock proxy, but as a generational alternative to the $26 trillion gold market. 

The ‘Digital Gold’ Math

Mitchnick frames Bitcoin’s valuation through store-of-value demand rather than short-term trading cycles. Gold holds a market size of about $26 trillion. Bitcoin’s future depends on how individuals and institutions divide their wealth between both assets. 

Moreover, central banks still dominate gold ownership, while younger investors show little interest in gold relative to Bitcoin. This demographic trend reshapes long-term demand and signals a slow generational handoff. 

Related: Bitcoin and Gold Futures Stuck in Limbo as CME Battles Outage

Corporates also appear more open to Bitcoin exposure than gold. Consequently, the store-value narrative grows stronger as companies adopt digital balance-sheet strategies.

Mitchnick views the market as two layered segments. The first consists of fast traders who use leverage and chase momentum. They rotate easily into themes like AI and equities. The second layer includes long-horizon investors who evaluate Bitcoin as a monetary alternative rather than a speculative asset. 

This segment grows steadily and anchors Bitcoin’s structural demand. Additionally, this group focuses on correlations, which influence portfolio sizing and diversification goals.

Correlations and Portfolio Construction Drive Allocation Decisions

Mitchnick links Bitcoin’s optimal allocation to its correlation with traditional assets. A low correlation strengthens the argument for a meaningful position. A high correlation weakens that case. 

Hence, correlation assumptions determine whether holding Bitcoin adds or reduces portfolio risk. BlackRock’s internal modeling places a 1-2% allocation as a suitable target for diversified strategies. Investors also compare that sizing with large technology stocks that already contribute similar risk levels in portfolios.

Stablecoins Expand While Bitcoin Retains Its Core Role

Stablecoins continue growing as efficient payment instruments. They support remittances, cross-border flows, and settlement activities. Bitcoin’s payment role remains possible but less developed. 

Moreover, Bitcoin’s strongest product-market fit stays anchored in store-value demand rather than global payments. Mitchnick expects that trend to continue while scaling technologies evolve.

Related: Peter Schiff Calls Bitcoin a ‘Fake Asset’ as Gold, Silver Rally While Crypto Dumps