Asset management giant BlackRock is reportedly promoting Bitcoin (BTC) as part of a balanced portfolio.
According to a new one report by Bloomberg, BlackRock – which has more than $10 trillion in assets under its management – has released a new research paper stating that an allocation of 2% of top crypto assets by market cap into multi-asset portfolios is “reasonable.”
Additionally, BlackRock says that investors who weight their portfolios with 1% or 2% BTC would “produce a similar risk profile to the so-called Magnificent Seven technology stocks in a standard 60/40 portfolio of stocks and bonds.”
However, the asset management firm also warns that portfolios containing more than 2% of the crypto king would “greatly increase” their risk.
As Samara Cowen and the other authors of the article say, according to Bloomberg:
“Even though Bitcoin’s correlation with other assets is relatively low, it is more volatile, so the effect on overall risk contribution is generally similar. A Bitcoin allocation would have the benefit of providing a diverse source of risk, while an overweight in the Magnificent 7 would increase existing risk and portfolio concentration.”
The Magnificent Seven includes tech giants that have made huge gains over the past decade, including Google, Amazon, Tesla, Microsoft and Nvidia.
According to the authors of the article, Bitcoin will eventually become less volatile once major institutions adopt it. However, this could also slow down the explosive recovery.
“If Bitcoin were indeed to gain widespread adoption, it could also potentially become less risky in the future – but at that point it may no longer have a structural catalyst for further significant price increases.”
Bitcoin is trading at $101,573 at the time of writing, down 1.1% over the past day.
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