BlackRock Says Bitcoin’s Role Is Evolving, Calls 1%-2% Portfolio Allocation Appropriate

BlackRock Inc., the world’s largest asset manager, said Bitcoin is a viable diversification asset in investment portfolios and suggested a 1% to 2% allocation.

Wu Blockchain reported on June 23 that BlackRock said in a recent report that Bitcoin’s role as an investment asset is evolving and that it can be used as a complementary diversification tool in long-term investment strategies.

In the report, BlackRock said allocating 1% to 2% of a portfolio to Bitcoin is generally appropriate to raise expected returns while managing overall risk.

The firm added that Bitcoin has a return profile distinct from traditional assets such as stocks and bonds, which can enhance portfolio diversification.

BlackRock cautioned that Bitcoin’s high volatility means an outsized allocation could significantly increase investment risk. For most investors, it advised a limited strategic allocation.