Thomas Daniels
Bitcoin is being included into the model investment portfolios of BlackRock, the largest asset manager in the world with over $10 trillion in assets under management (AUM).
BlackRock will contribute 1% to 2% of its iShares Bitcoin Trust ETF (IBIT) to its model portfolios that incorporate alternative assets, per a February 28 Bloomberg story. Financial advisors are the target market for these portfolios, which provide pre-structured investment strategies.
Due in large part to growing investor interest in digital assets and cryptocurrency-based exchange-traded products (ETPs), model portfolios have become increasingly popular. Currently holding 576,046 BTC, BlackRock’s IBIT, a $48 billion spot Bitcoin ETF, accounts for roughly 2.9% of the overall market share of Bitcoin. The asset manager may increase institutional demand for spot Bitcoin ETFs by including IBIT holdings into its $150 billion model portfolio.
The decision indicates growing institutional confidence in Bitcoin, even though this $150 billion allocation only represents a small portion of BlackRock’s overall model portfolio business. This opinion was reaffirmed by Michael Gates, lead portfolio manager for target allocation ETF models at BlackRock, who said:
“We think Bitcoin has long-term investment potential and can offer portfolio diversification in novel and complementary ways.”
In January 2024, IBIT and a number of other spot Bitcoin ETFs were approved by the U.S. Securities and Exchange Commission (SEC). Regulators approved the listing of Bitcoin ETFs by BlackRock, Fidelity Investments, WisdomTree, and VanEck.
In March 2024, Bitcoin’s price surged beyond $69,000 due to strong investor demand for these funds, ultimately hitting an all-time high above $109,000. The drop in Bitcoin to $79,000, however, has been attributed to recent sell-offs and withdrawals from spot Bitcoin ETFs, such as IBIT.
