2% allocation reasonable for portfolios

BlackRock has proposed a Bitcoin allocation size for the first time, likening the digital asset to Wall Street’s “Magnificent 7”.

An allocation of 1-2% of a multi-asset portfolio to Bitcoin (BTC) represents a “reasonable range,” as spot BTC exchange-traded funds have accumulated $113 billion in assets under management, according to a new BlackRock report.

The $11.5 trillion asset manager envisions an ideal portfolio split 60-40 between stocks and bonds. BlackRock proposes filling the equity segment with Alphabet (Google), Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla (referred to as the Magnificent 7) and maintaining the same risk weighting with a 2% BTC allocation.

“Why not more? Going beyond that would sharply increase Bitcoin’s share of overall portfolio risk, according to the world’s largest asset manager and spot BTC ETF issuer.

This is the first time BlackRock has publicly stated how much investors should allocate to BTC. Bloomberg’s Eric Balchunas notes that the report often asks “how much?” He stated that he addressed the question. Questions. As of December 12, BlackRock’s IBIT dominated the spot BTC ETF market, managing $53.8 billion in investments.

BlackRock’s new report today recommending a 1-2% exposure to the Bitcoin ETF is the first time they’ve given a specific number (they published this because they’re getting so much income from this q, how much?). pic.twitter.com/X7iF06xXFa

— Eric Balchunas (@EricBalchunas) December 12, 2024

Spot Bitcoin funds currently hold 1,104 million BTC, exceeding Satoshi Nakamoto’s balance. BlackRock’s ETF accounts for about half of that investor stock, with approximately 529,000 tokens held under Coinbase Custody.

Crypto sentiment has suggested that Bitcoin and spot BTC ETF demand will grow rapidly under the pro-crypto Donald Trump administration.

Banks like Goldman Sachs, which currently owns nearly $1 billion worth of BTC ETF stakes, have signaled their desire to increase participation based on regulatory changes. While states such as Alabama and Pennsylvania were considering passing laws to create strategic BTC reserves, governments in the USA, Brazil and Canada were also considering the same legislation.