BlackRock, the world’s largest asset management firm, has reportedly incorporated its iShares spot Bitcoin (BTC) exchange-traded fund (IBIT) into some of its model portfolios.
Bloomberg, citing a BlackRock investment outlook that its journalists had viewed, reports that the firm added a 1-2% allocation for IBIT in model portfolios that allow for alternative investments.
Model portfolios are a basket of different investments crafted by a financial advisor.
Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite, reportedly wrote in an investment commentary this week that the firm believes Bitcoin has “long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios.”
In January, BlackRock CEO Larry Fink said that sovereign wealth funds could drive the price of Bitcoin higher if they attempt to hedge against “local fears,” such as inflation and political or economic uncertainty.
“If you’re frightened of the debasement of your currency or you’re frightened of the economic or political stability of your country, you can have an internationally based instrument called Bitcoin that will overcome those local fears.
And so I’m a big believer in the utilization of that as an instrument, and so if that becomes true and you see that it could be a proper hedge against hope securities or equities, the question is, could you see it be a 2% or 5% allocation?
I was with a sovereign wealth fund during this week and that was the conversation. Should we have a 2% allocation? Should we have a 5% allocation? If everybody adopted that conversation, it would be $500,000, $600,000, $700,000 per Bitcoin.”
IBIT is the largest Bitcoin ETF, with $47.89 billion worth of assets under management (AUM), according to data from Coinglass.
The U.S. Securities and Exchange Commission (SEC) greenlit the first spot market Bitcoin ETFs in January 2024, bringing in billions of dollars worth of inflows to the top digital asset by market cap. The regulator subsequently approved Ethereum (ETH) ETFs for trading in July.
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