Financial and Business News

Bitcoin Soars to $105K as BlackRock Recommends 2% Portfolio Allocation

Wednesday, 18/12/2024 | 10:14 GMT by Tareq Sikder
  • BlackRock's iShares Bitcoin Trust holds $51.1 billion after record ETF inflows.
  • The asset manager notes Bitcoin's risk is similar to large tech stocks like Nvidia.
Blackrock

BlackRock, the global asset management firm, has suggested that investors allocate up to 2% of their portfolios to Bitcoin. The recommendation was included in a report, which highlights Bitcoin's potential as a diversifying asset, given its historically lower correlation with other major asset classes.

As of now, Bitcoin (BTCUSD) is trading at an all-time high of approximately $105,000. BlackRock emphasized that Bitcoin could provide an alternative source of returns within a portfolio. However, the firm warned of significant risks associated with the cryptocurrency.

Bitcoin ETFs Attract $100 Billion

“Bitcoin remains highly volatile and vulnerable to sharp selloffs,” the report noted. It also stated that Bitcoin’s returns have, at times, moved in tandem with risk assets like stocks, limiting its effectiveness as a hedge.

The report follows the successful launch of Bitcoin-related exchange -traded products earlier this year. These products collectively attracted over $100 billion in assets, according to data from VettaFi. BlackRock’s iShares Bitcoin Trust accounted for $51.1 billion of these assets, leading the market.

Bitcoin Surges Toward $105K

BTCUSD reached $100,000 and then consolidated for a while. The daily chart shows a bullish breakout, with the price now heading toward $105,000, fuelled by strong bullish momentum. As of writing, the cryptocurrency is trading well above $100,000, even during the holiday season, approaching new highs.

BTCUSD, Daily Chart, Source: TradingView
BTCUSD, Daily Chart, Source: TradingView

Bitcoin Draws Comparisons to Tech

BlackRock based its recommendation on how Bitcoin influences overall portfolio risk. While Bitcoin is viewed as a unique asset, BlackRock compared its impact to that of large technology companies like Nvidia. The report noted that these companies have an average market capitalization of $2.5 trillion, comparable to Bitcoin's $2 trillion valuation.

BlackRock cautioned against exceeding the 2% allocation threshold, stating that Bitcoin’s contribution to portfolio risk would become disproportionately large beyond this level. The report also stressed the importance of monitoring Bitcoin's evolving characteristics, including its adoption rate, correlation with equities, and volatility.

BlackRock, the global asset management firm, has suggested that investors allocate up to 2% of their portfolios to Bitcoin. The recommendation was included in a report, which highlights Bitcoin's potential as a diversifying asset, given its historically lower correlation with other major asset classes.

As of now, Bitcoin (BTCUSD) is trading at an all-time high of approximately $105,000. BlackRock emphasized that Bitcoin could provide an alternative source of returns within a portfolio. However, the firm warned of significant risks associated with the cryptocurrency.

Bitcoin ETFs Attract $100 Billion

“Bitcoin remains highly volatile and vulnerable to sharp selloffs,” the report noted. It also stated that Bitcoin’s returns have, at times, moved in tandem with risk assets like stocks, limiting its effectiveness as a hedge.

The report follows the successful launch of Bitcoin-related exchange -traded products earlier this year. These products collectively attracted over $100 billion in assets, according to data from VettaFi. BlackRock’s iShares Bitcoin Trust accounted for $51.1 billion of these assets, leading the market.

Bitcoin Surges Toward $105K

BTCUSD reached $100,000 and then consolidated for a while. The daily chart shows a bullish breakout, with the price now heading toward $105,000, fuelled by strong bullish momentum. As of writing, the cryptocurrency is trading well above $100,000, even during the holiday season, approaching new highs.

BTCUSD, Daily Chart, Source: TradingView
BTCUSD, Daily Chart, Source: TradingView

Bitcoin Draws Comparisons to Tech

BlackRock based its recommendation on how Bitcoin influences overall portfolio risk. While Bitcoin is viewed as a unique asset, BlackRock compared its impact to that of large technology companies like Nvidia. The report noted that these companies have an average market capitalization of $2.5 trillion, comparable to Bitcoin's $2 trillion valuation.

BlackRock cautioned against exceeding the 2% allocation threshold, stating that Bitcoin’s contribution to portfolio risk would become disproportionately large beyond this level. The report also stressed the importance of monitoring Bitcoin's evolving characteristics, including its adoption rate, correlation with equities, and volatility.

About the Author: Tareq Sikder
Tareq Sikder
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Tareq is a financial writer with 15 years of experience covering global markets. His work spans technical analysis, forex broker reviews, and market sentiment, with a focus on topics relevant to retail traders. He joined Finance Magnates in 2023. At Finance Magnates, he serves as News Editor, covering retail forex and CFD brokers, cryptocurrency exchanges, fintech firms, and regulatory developments shaping the trading industry. He holds an Honours degree in Information Technology from Anfell College, London. Education: Honours degree Information Technology, Anfell College, London

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