BlackRock Compares Bitcoin to Magnificent 7 Stocks, Recommends 2% Allocation
Highlights
- BlackRock identifies Bitcoin’s risk profile as similar to the Magnificent Seven stocks.
- The asset manager suggests investors allocate 1-2% of their portfolios to BTC.
- BlackRock anticipates Bitcoin’s returns will gradually decrease over time.
BlackRock Endorses Bitcoin Investment
BlackRock, the world’s largest asset manager, has drawn comparisons between Bitcoin and the “Magnificent Seven” stocks (Apple, Amazon, Tesla, Nvidia, Meta, Google, and Microsoft). In a recent research report, BlackRock analysts recommended a 1-2% allocation to Bitcoin, asserting that the cryptocurrency offers a comparable risk profile to these prominent tech stocks.
The report further highlighted a potential divergence between Bitcoin and traditional assets due to factors such as global financial fragmentation, geopolitical tensions, declining trust in financial systems, and increasing deficits.
BlackRock’s Take on Bitcoin’s Future Returns
While BlackRock supports Bitcoin as a viable investment, the firm cautions that BTC’s returns may diminish over time. According to Samara Cohen, BlackRock’s Chief Investment Officer for ETF and Index Products, Bitcoin’s return characteristics may eventually resemble gold, serving more as a hedge than a high-yield asset.
“The return characteristics are likely to change significantly once Bitcoin allocations become more tactical, similar to gold, with a different risk-return profile,” Cohen explained.
Bitcoin ETF Success and Client Interest
Bloomberg analyst James Seyffart speculated that BlackRock’s recommendation stems from growing client inquiries about Bitcoin’s allocation within its Spot Bitcoin ETF. This ETF has achieved remarkable success, with $53.86 billion in assets under management, surpassing even Satoshi Nakamoto’s BTC holdings.
BlackRock’s move represents the first time the firm has offered a specific allocation percentage for Bitcoin, marking a significant endorsement of the cryptocurrency.
While BlackRock is optimistic about Bitcoin’s role in investment portfolios, skepticism remains among some traditional players, such as Microsoft shareholders, who recently voted against adopting BTC on the company’s balance sheet. Nonetheless, BlackRock’s guidance reinforces Bitcoin’s growing recognition in the financial landscape.
