Here's How Much Bitcoin You Should Have in Your Portfolio, According to BlackRock

From decrypt by Mat Di Salvo

BlackRock, a Bitcoin ETF issuer, is the world's largest asset manager. Image: Shutterstock

BlackRock’s iShares  Bitcoin  Trust ETF has been a roaring success, smashing records and now managing $53.8 billion in assets. 

But the world’s biggest asset manager still has a conservative view of the cryptocurrency—and recommends that investors who want to invest in Bitcoin should only put a maximum of 2% of the orange coin in their portfolio. 

In a Thursday report, the Wall Street titan said that putting Bitcoin in a portfolio was like investing in top tech stocks: potentially beneficial, but also risky.

“Over its short history, Bitcoin has seen both major surges and selloffs,” the report notes. “This volatility, plus Bitcoin’s unique characteristics, raises the question of what role it should play in portfolios.”

It added that “a reasonable range for Bitcoin exposure” was 1-2% of a portfolio’s total value. It added that the asset was still risky, and with no underlying cash flows, adoption was the only thing driving its price.

“Over its short history, Bitcoin has seen both major surges and selloffs,” the report notes. “This volatility, plus Bitcoin’s unique characteristics, raises the question of what role it should play in portfolios.”

It added that “a reasonable range for Bitcoin exposure” was 1-2% of a portfolio’s total value. It added that the asset was still risky, and with no underlying cash flows, adoption was the only thing driving its price.

Then, in January, Wall Street’s top regulator  approved  the BlackRock iShares Bitcoin Trust—along with  10 other ETFs —and it started trading. 

Of all the crypto ETFs, BlackRock’s has been the most successful, attracting the most investment and trading volume. 

BlackRock has previously  said  that Bitcoin is in an asset class of its own, and that investors are buying it to hedge against any potential debt crises.