BlackRock Reassesses Bitcoin as a Global Monetary Alternative

U.Today – The world’s largest asset manager, BlackRock (NYSE:BLK), has changed its official perspective on Bitcoin, now referring to it as a global monetary alternative, according to Jay Jacobs, the U.S. Head of Thematic and Active ETFs at BlackRock, during a recent digital assets conference.

The presentation described the features of Bitcoin in comparison to conventional financial assets like U.S. gold and Treasuries. The main conclusions indicate that in contrast to the U.S. markets’ variable supply, BlackRock views Bitcoin’s supply as fixed. U.S. Treasury bonds and gold supply are somewhat fixed, yet Bitcoin exhibits higher volatility than U.S. stocks.

A notable distinction is Bitcoin’s short track record compared to the medium and long histories of gold and Treasuries. However, Bitcoin is decentralized, similar to gold’s status as a money reserve. The second part of the presentation focused on Bitcoin’s volatility and its relationships with assets like gold and stocks.

Bitcoin’s historical correlation with the stock market is minimal, making it a desirable portfolio diversifier. Although Bitcoin is highly volatile, its volatility has decreased over time, contributing to its maturity in the market. The final section explored the potential effects of modest Bitcoin allocations on conventional portfolios.

Scenarios were proposed where Bitcoin comprised 1% to 5% of the portfolio. Results indicated that despite its higher volatility, portfolios including Bitcoin posted better returns and risk-adjusted metrics. While higher Bitcoin allocations led to better returns, they also resulted in sharper risk metrics like drawdowns.

As institutional investors like BlackRock start incorporating Bitcoin into their portfolios, the broader market may continue to evolve, reducing the gap between cryptocurrency and traditional financial systems.

This article was originally published on U.Today