Based on a research published Thursday, BlackRock (NYSE:BLK) urged investors with the suitable governance and risk tolerance to consider allocating up to 2% of their portfolio to Bitcoin. Senior professionals including Senior Portfolio Strategist Paul Henderson and Chief Investment Officer of ETFs Samara Cohen wrote the paper detailing the possible advantages of bitcoin inside a diversified portfolio. The asset manager pointed out that bitcoin’s weaker connection with other main asset classes might make it a complementing addition, maybe improving portfolio results.
The paper did, however, also caution on the dangers of bitcoin, stressing its volatility and sensitivity to rapid price falls. Although bitcoin has exhibited times of divergence from conventional risk assets, there have been cases when its performance matched that of stocks, therefore compromising its function as a hedge. BlackRock has witnessed a lot of interest in the market since it debuted fresh exchange-traded products connected to bitcoin in January. Data from VettaFi shows that these products, which form part of a record-setting ETF launch, have acquired over $100 billion in assets.
This article first appeared on GuruFocus.
