How much BTC should be bought? BlackRock: Occupy 1%-2% of investment allocation, high risk cannot be ignored.

What happened?

BlackRock, the world's largest asset management company, has released a report titled "The Size of Bitcoin in Investment Portfolios", which states that Bitcoin should account for 1% to 2% of investment portfolios and carries similar risks as the "Big Seven" tech stocks.

BlackRock emphasizes that the extremely high volatility of Bitcoin represents the proportion of risk that Bitcoin occupies in the portfolio, which cannot be ignored in any case.

BlackRock: Bitcoin investment risks should not be ignored, and a "risk budget" approach should be taken for allocation.

BlackRock, the world's largest asset management company, released a report on December 12th, stating that the allocation of Bitcoin (BTC) in investment portfolios should be 1% to 2%, as the risk allocation within this range is similar to the well-known 'Big Seven Tech Stocks'.

BlackRock believes that when traditional asset classes such as stocks and bonds underperform, Bitcoin can bring some returns to investors. Such allocation can effectively diversify risks and avoid overconcentration on a single asset class, compared to the traditional 60% stocks and 40% bonds portfolio. However, if the allocation exceeds 2%, it will significantly increase the impact of Bitcoin on the overall investment portfolio risk.

In addition, the report points out that a 1-2% allocation of Bitcoin brings similar risks to the overall portfolio as investing in the 'Big 7 Tech Stocks' such as Amazon, Microsoft, and NVIDIA.

The report mentioned that the market demand for Bitcoin and investor confidence have gradually made it a special asset in the capital market, but the high volatility of Bitcoin is still a risk factor that investors must consider.

BlackRock emphasizes that although the correlation between Bitcoin and other assets is low, its high volatility means that the proportion of Bitcoin's risk in the portfolio cannot be ignored.

Therefore, BlackRock suggests that investors should use a 'risk budget' approach to determine the allocation ratio of Bitcoin. This can maintain diversification while controlling overall investment risk.

The driving force behind Bitcoin's astonishing price increase this year: ETFs and Trump's policies

The astonishing surge of Bitcoin this year (over 140%) is mainly influenced by several factors, among which the most notable is the approval of the US spot Bitcoin ETF in January 2024.

According to Bloomberg, the assets under management of Bitcoin ETF have exceeded 113 billion US dollars since its launch. After Trump's election, investors' enthusiasm for the cryptocurrency market continues to rise, further driving up the price of Bitcoin.

These ETFs have attracted a large influx of institutional funds, among which BlackRock's iShares Bitcoin Trust (IBIT) is currently the largest spot Bitcoin ETF with assets under management of nearly $54 billion.

Despite the increasing market demand for Bitcoin, as more institutions and investors enter the market in the future, it will also help alleviate the volatility of Bitcoin, thereby facilitating the allocation of Bitcoin in investment portfolios.

However, on the flip side, this may also weaken the growth potential of Bitcoin's future price, and the price increase may gradually slow down.

Simply put, if more and more people accept and adopt Bitcoin in the future, the high volatility may gradually decrease and move towards a role similar to gold.

Therefore, BlackRock believes that using Bitcoin as a hedge tool and playing a role similar to gold may be one of the future investment strategies.

[Disclaimer] The market is risky, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific situation. Investment based on this article is at your own risk.

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Original author: Shao Yuanting Please provide the text to be translated. Original Title: "How Much Bitcoin Should You Buy? BlackRock: Best to Allocate 1% to 2% of Investment Portfolio"

How much bitcoin should I buy? BlackRock: Allocate 1% to 2% of investment, high risk cannot be ignored. This article was first published in 'Crypto City'.