tl;dr
BlackRock has added Bitcoin to its model portfolio offerings through the iShares Bitcoin Trust ETF (IBIT), allocating 1% to 2% of its target allocation portfolios to IBIT. This decision was prompted by Bitcoin's long-term investment potential and the desire to provide diversification to portfolios. ...
BlackRock has incorporated Bitcoin (BTC) into its $150 billion model-portfolio offerings through its iShares Bitcoin Trust ETF (IBIT) exchange-traded fund (ETF). The asset manager has assigned 1% to 2% of its target allocation portfolios to IBIT, citing long-term investment potential and diversification benefits.
Despite recent outflows from IBIT, BlackRock's move to incorporate Bitcoin into its model portfolio could have a positive impact on market sentiment amid falling prices. As of December 17, the fund registered over $36 billion in net flows, amassing more inflows than any ETF launched since 2014.
According to a December report from the BlackRock Investment Institute, Bitcoin’s inherent volatility prompted the firm to define a 1% to 2% allocation as a “reasonable range.” The lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite believes that Bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios.
The decision to add Bitcoin to the model portfolio comes amid IBIT registering $930 million in outflows in the past four days, with the fund experiencing its largest daily outflow of $418 million on Feb. 26. Despite the recent woes, IBIT currently holds over $48 billion in assets and displays nearly $40 billion in net flows.
Notably, BlackRock doubled its Bitcoin exposure in its Global Allocation Fund last year, reporting 430,770 shares of IBIT in its third-quarter 13F Form, 117% larger than the shares reported for the second quarter. BlackRock’s addition of Bitcoin to its model portfolio is a much-needed positive development that could boost market sentiment amid falling prices.