BlackRock, the world's largest asset manager, has incorporated its iShares Bitcoin Trust ETF (IBIT) into model portfolios with a modest 1-2% allocation, marking another milestone in Bitcoin's mainstream adoption.
The investment giant, which oversees more than $11 trillion in assets, made this strategic move as part of broader portfolio adjustments. The allocation percentage was carefully chosen considering Bitcoin's price volatility, which BlackRock describes as a "reasonable range" that wouldn't overly impact overall portfolio risk.
Michael Gates, lead portfolio manager for BlackRock's Target Allocation ETF model portfolio suite, emphasized Bitcoin's potential as a diversification tool. "We believe Bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios," Gates stated in a recent investment commentary.
The decision affects BlackRock's $150-billion model portfolio product, which serves financial advisers managing client assets. These portfolios cater to various investment objectives, including growth, income generation, and capital preservation.
Since its January 2024 launch, IBIT has demonstrated strong market performance, attracting over $37 billion in inflows. The ETF reached $40 billion in assets within 211 days, establishing itself as one of the largest ETFs in the market.
However, recent market conditions have presented challenges. The cryptocurrency market has faced pressure from economic uncertainties and trade tensions, with Bitcoin experiencing price fluctuations from nearly $110,000 to around $84,500. IBIT witnessed $900 million in outflows last week, reflecting broader market sentiment.
BlackRock's integration of Bitcoin into its model portfolios represents a calculated approach to cryptocurrency investment, balancing potential returns with risk management in traditional investment frameworks.