BlackRock Integrates Bitcoin into Its Investment Strategy
BlackRock has made a notable move by incorporating the iShares Bitcoin Trust (IBIT) into one of its model portfolios. This fund, managed by the asset giant, directly holds bitcoin (BTC) as part of its investment strategy. These model portfolios serve as benchmarks and are widely utilized by advisors and investment platforms, who may also request specific adjustments to align with their investment needs.
According to James Seyffart, an ETF analyst at Bloomberg Intelligence, BlackRock has allocated between 1% and 2% to IBIT within its target allocation portfolio, which permits the inclusion of alternative assets. In a recent report, Michael Gates, the lead portfolio manager for BlackRock’s Target Allocation ETF models, articulated several compelling reasons supporting the long-term investment potential of bitcoin.
Gates emphasized that bitcoin possesses unique characteristics that make it a compelling store of value and a global monetary alternative. He highlighted its role as a hedge against the dominance of the U.S. dollar, as well as its potential to mitigate risks associated with political instability. Furthermore, he pointed out that bitcoin could serve as a proxy for the ongoing transition from traditional offline goods and services to their online counterparts.
According to Gates, “Collectively, these features may help provide unique and additive sources of risk premia and diversification to traditional multi-asset portfolios.” This integration marks a significant milestone for IBIT, as it is the first instance of BlackRock incorporating this cryptocurrency into any of its investment models.
“This is a significant development because it represents the first of BlackRock’s models to include bitcoin,” noted Seyffart. “While it likely won’t be the last, it’s important to recognize that bitcoin can be a divisive asset—some investors may embrace this move while others may oppose it. Therefore, it remains uncertain when, or if, IBIT will be added to BlackRock’s primary models, which manage substantially larger amounts of capital.”
Currently, BlackRock’s model portfolios oversee approximately $130 billion in assets, underscoring the potential impact of this decision on the broader investment landscape.
