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In summary
- The BlackRock ETF achieved all-time records, managing $53.8 billion in assets.
- The report recommended limiting Bitcoin exposure to a range of 1-2%.
- BlackRock indicated that greater adoption could reduce risks but limit future upside.
BlackRock’s iShares Bitcoin Trust exchange-traded fund (ETF) has been a runaway success, breaking records and currently managing $53.8 billion in assets.
However, the world’s largest asset manager maintains a conservative view of the Cryptocurrency — and recommends that investors looking to invest in Bitcoin should only place a maximum of 2% of the orange coin in their portfolio.
In a report on Thursday, the Wall Street titan indicated that including Bitcoin in a portfolio was like investing in top tech stocks: potentially beneficial, but also risky.
“Throughout its short history, Bitcoin has experienced both large rises and falls,” the report quotes. “This volatility, along with Bitcoin’s unique characteristics, raises the question of what role it should play in portfolios.”
He added that “a reasonable range for Bitcoin exposure” was 1-2% of a portfolio’s total value. He added that the asset remained risky and, without underlying cash flows, adoption was the only thing driving its price.
The report — written by Samara Cohen, Paul Henderson, Robert Mitchnick and Vivek Paul — noted that greater adoption in the future could make Bitcoin less risky. But if this were to happen, it could “no longer have a structural catalyst for future significant price increases.”
BlackRock’s report is aimed at users who want to include Bitcoin in their multi-asset portfolios; The Wall Street giant is not necessarily advising all investors to buy the cryptocurrency.
BlackRock shook the markets last year when it filed an application to launch a Bitcoin exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC).
Then in January, Wall Street’s top regulator approved BlackRock’s iShares Bitcoin Trust, along with 10 other ETFs, and it began trading.
Of all the cryptocurrency ETFs, BlackRock’s has been the most successful, attracting the largest investment and trading volume.
BlackRock has previously claimed that Bitcoin is in an asset class of its own, and that investors are buying it as a hedge against potential debt crises.
Edited by Andrew Hayward
Editor’s note: This story was updated after publication to include clarification on BlackRock’s recommendation.
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