BlackRock Allocates 1-2% of $150 Billion Portfolios to Bitcoin ETF Amid Market Turmoil
BlackRock has officially added Bitcoin to its $150 billion model portfolios, allocating 1% to 2% to its iShares Bitcoin Trust ETF (IBIT), according to a Bloomberg report. This move marks a significant shift for the world’s largest asset manager, integrating Bitcoin into its investment strategies for alternative assets.
The decision comes as Bitcoin ETFs face record outflows, with investors pulling $3.3 billion in February alone. Fidelity’s FBTC saw the largest outflow, losing $1.4 billion, as Bitcoin’s price dropped 28% from its peak amid rising inflation and economic uncertainty. The IBIT, which launched in January 2024 and attracted over $37 billion in its debut year, recently saw $900 million withdrawn in a single week.
Michael Gates, BlackRock’s lead portfolio manager for its Target Allocation ETF portfolios, defended the move, stating that Bitcoin offers long-term investment potential and diversification benefits. A recent report from the BlackRock Investment Institute also recommended a 1% to 2% Bitcoin allocation, warning that anything higher would expose portfolios to excessive risk.
In addition to its Bitcoin allocation, BlackRock adjusted other parts of its portfolio, reducing its overweight in equities and long-duration bonds. These shifts led to major fund flows, including $2.3 billion into the iShares 10-20 Year Treasury Bond ETF (TLH) and $1.8 billion out of the iShares 20+ Year Treasury Bond ETF (TLT).
Meanwhile, the broader crypto market is under pressure. Hackers recently stole $1.5 billion from the Bybit exchange—the largest crypto theft in history—further shaking investor confidence. Hedge funds are also unwinding basis trades amid rising volatility.
Despite Bitcoin’s struggles, gold has emerged as a popular safe-haven asset, attracting $6.3 billion in inflows in February. Analysts suggest that Bitcoin’s correlation with tech stocks, rather than gold, limits its effectiveness as a portfolio diversifier.
For now, BlackRock seems committed to its cautious 1% to 2% Bitcoin allocation. Whether this changes will depend on how well Bitcoin weathers the ongoing market turbulence.
Featured image from: cointelegraph.com