BlackRock, the world’s leading asset manager, is set to make significant moves in the cryptocurrency industry by fully embracing Bitcoin. Not only has the firm filed for a spot Bitcoin ETF application, but it has also advised an 84.9% allocation of the digital asset in an optimal portfolio. This unanticipated suggestion indicates a strong belief in Bitcoin’s potential. If all investors were to adopt this, Bitcoin’s total value could surpass the combined worth of bonds, equities, and real estate.
In explaining their rationale for such a large allocation to Bitcoin, BlackRock pointed to the cryptocurrency’s volatility but stressed its pronounced positive skewness. Despite the wild swings in Bitcoin’s prices, the potential for substantial gains outweighs the risk of a downside. Analyst ‘PlanB’ has suggested the crypto market is in the early stages of a bull run, leading to speculation that BlackRock aims to purchase Bitcoin at a lower price, specifically before ETF approval and the onset of a bull market.
Coming from the world’s largest asset manager, BlackRock’s endorsement carries significant weight in the financial world. The sizeable Bitcoin allocation in the optimal portfolio demonstrates a growing recognition of the digital asset’s potential as a store of value and a hedge against inflation. Challenged in a world reeling from a pandemic, more investors are considering digital assets as a useful way to diversify portfolios and cushion risks.
As the pursuit heats up for a Bitcoin ETF, monitoring the applications of asset management giants like BlackRock, Ark, and 21Shares could be crucial. While the SEC has not yet approved a spot Bitcoin ETF, the crypto community remains optimistic about BlackRock’s chances. The interaction with the SEC also signals possible attempts to exert control over the crypto space through major Wall Street players.