BlackRock Incorporates Bitcoin ETF into Model Portfolios

BlackRock, the leading asset management firm globally, has decided to include its iShares Bitcoin Trust (IBIT) in its model portfolio offerings. This move was confirmed by the company in a recent announcement.

The firm plans to integrate a small allocation of 1% to 2% of IBIT shares into its Target Allocation with Alternatives portfolios. These portfolios are tailored for investors who are willing to take on more risk.

A representative from BlackRock explained that the Target Allocation with Alternatives models are designed to invest across a broad risk spectrum. These models typically consist of a core investment in stocks and bonds, alongside liquid alternative investments. The addition of IBIT is intended to serve as a diversifying factor in the portfolio, aligning with its objectives for higher-risk budgets and growth potential.

While the change represents a modest addition to BlackRock’s Target Allocation with Alternatives portfolios, it may stimulate new interest in the Bitcoin ETF. This move also signifies a broader acceptance of cryptocurrency assets within traditional finance, in response to increasing market demand for such products. In recent years, model portfolios, which provide pre-designed strategies for financial advisors, have gained considerable popularity. BlackRock's CEO, Larry Fink, has changed his stance on crypto—previously a skeptic, he now expresses a more optimistic outlook on Bitcoin.

As noted by an analyst at ETF.com, Sumit Roy, this development marks another significant step in bringing Bitcoin into the realm of mainstream investment. With IBIT already achieving rapid success—reaching $60 million in assets under management faster than any other ETF in the last 32 years—this latest action could further enhance demand for the fund.

IBIT was launched in January 2024, alongside several other Bitcoin-tracking funds, making an impressive start. Despite experiencing a decline of over $1 billion in assets recently due to market volatility linked to inflation and other economic uncertainties, the fund still maintains about three times the assets compared to its largest competitors.

Overall, spot Bitcoin funds hold approximately $90 billion in assets under management. However, these funds have also faced recent losses, shedding around $2.4 billion over the past week.

Currently, Bitcoin's value is fluctuating above $84,000, recovering nearly 8% from a low of under $79,000, yet it remains below its all-time high of over $108,000 recorded in January. The cryptocurrency has decreased by 13% over the past month.

Roy emphasized that while demand for IBIT due to the new portfolio allocation is uncertain, potential inflows could amount to only millions, rather than billions. In the short term, this adjustment may hold more symbolic value than a substantial impact on fund flows.

BlackRock, Bitcoin, ETF