Just In: BlackRock Compares Bitcoin To ‘Magnificent 7’, Recommends 2% Allocation To BTC

The world’s largest asset manager, BlackRock, has made a compelling case for Bitcoin. The asset manager asserted that the flagship crypto shares a similar risk profile to the magnificent seven stocks and recommended that investors allocate up to 2% to BTC.

BlackRock Makes Compelling Case For Bitcoin

Forbes reported about a recent research report by BlackRock, which made a case for why investors should look to invest in the flagship crypto. The report, written by the firm’s analysts, stated that Bitcoin offers a risk profile similar to that of the Magnificent Seven firms (Apple, Amazon, Tesla, Nvidia, Meta, Google, and Microsoft).

In line with this, these analysts determined that a 1% to 2% allocation to Bitcoin brings about a similar risk profile to these stocks. Meanwhile, the asset manager highlighted the correlation between BTC and these traditional assets but suggested that there might be a divergence soon enough.

BlackRock claimed that this will happen because of factors such as the global fragmentation of the financial system, growing geopolitical tensions, a lack of confidence in the financial system, and growing deficits.

Despite the strong case for BTC, companies like Microsoft are still uncertain about its potential. Microsoft shareholders recently voted against the Bitcoin proposal, which could have allowed the tech giant to adopt Bitcoin on its balance sheet.

Meanwhile, the world’s largest asset manager hinted that the Bitcoin price may find it harder to record the kind of gains to which it has become accustomed as time passes.

According to BlackRock’s Chief Investment Officer of ETF and Index products, Samara Cohen,

“The return characteristics are likely to change significantly once we reach a target state where potentially the portfolio allocation is much more tactical like gold and is used for hedging with a very different set of characteristics.”

Reason For This Move

In an X post, Bloomberg analyst James Seyffart explained why BlackRock might have made this recommendation. He stated that the asset manager is likely receiving many questions from clients about how to size an allocation to the firm’s Spot Bitcoin ETF.

Seeyffart’s remarks were in response to Bloomberg analyst Eric Balchunas’ post in which he questioned why the asset manager was making such a recommendation. The analyst noted that this is the first time BlackRock has given a specific number.

It is worth mentioning that the firm’s Spot Bitcoin ETF is the most successful so far, with $53.86 billion in assets under management (AUM). Thanks to the asset manager, the Spot Bitcoin ETFs recently surpassed Satoshi Nakamoto’s BTC holdings.