In a groundbreaking asset allocation study, BlackRock, the world’s largest and most influential asset manager, has unveiled a game-changing revelation for investors seeking to maximize returns through Bitcoin. The study, which tracks BTC as a standalone investable asset, could have transformative implications. Despite being written last year, it has recently gained immense popularity on Twitter, sparking widespread interest in the financial community.
The study, conducted in April 2022, rigorously analyzed Bitcoin’s performance as an asset from July 2010 to December 2021 monthly. BlackRock’s findings have been astounding, particularly for investors seeking an optimal portfolio allocation. For a 60-40 portfolio (60% equities and 40% bonds) with a fixed risk aversion of γ = 1.50, the study recommends an audacious 84.9% allocation to BTC. The remaining 15.1% is suggested to be divided between equities and bonds, following a 60-40 ratio.
Joe Burnett’s Eye-Opening Perspective On BlackRock’s BTC Allocation
Commenting on the study, Joe Burnett from Blockware expressed enthusiasm, stating,
“Great chart published by BlackRock. Investors with long time horizons should hold overweight equity portfolios. However, now that Bitcoin is a superior money and savings technology, investors should consider an optimal BTC allocation of 80-100%.”
Burnett’s observation raises eyebrows, as he believes that if all investors embrace BlackRock’s recommended BTC allocation, the value of Bitcoin could skyrocket to extraordinary heights. He speculates, “If total global wealth is ~$800T today, Bitcoin would be $190M per coin.” Such a surge in BTC’s value would make it worth over five times the total value of equities, real estate, and bonds.
The implications of this potential scenario are far-reaching, potentially reshaping the overall financial landscape. The idea of Bitcoin as a must-have asset in every portfolio is gaining traction, with several banks making BTC price predictions above $120,000 in recent weeks.
Notably, BlackRock’s report acknowledges Bitcoin’s extreme volatility but emphasizes its pronounced positive skewness, making large BTC allocations highly appealing and potentially dominant in utility functions.
BlackRock’s Potential Influence After Spot ETF Approval
The study’s significance extends beyond the analysis itself, as it sheds light on BlackRock’s potential promotion of Bitcoin following the possible approval of the spot ETF by the US Securities and Exchange Commission (SEC). Drawing parallels to the story of the first gold ETF, Bitcoin’s trajectory after the ETF’s approval could mirror gold’s fivefold price increase in 2004, primarily driven by BlackRock’s financial advisors promoting a 5% gold allocation as a must-have in every portfolio.
Speaking of ETFs, the countdown for the first spot of Bitcoin ETF approval is rapidly approaching. BlackRock filed for its spot ETF in mid-June, with the first deadline for the SEC response set for September 2. While the SEC has not yet approved a spot Bitcoin ETF, many analysts firmly believe that BlackRock is a strong contender to become the first to receive approval.
However, in this competitive race, the Ark and 21Shares Bitcoin ETFs are also in the running, with the second deadline on August 13 following a successful refiling. Additionally, Bitwise’s first deadline concludes one day before BlackRock’s, on September 1. The competition is fierce, and the financial world eagerly awaits the momentous decision that could reshape the landscape of cryptocurrency investing.
Related Reading: | BlackRock Takes The Lead In Pursuit Of Bitcoin ETF As SEC Begins Review