BlackRock, the world’s largest asset management firm managing $11.5 trillion in assets, has recently decided to include its Bitcoin spot ETF in its $150 billion model portfolio products. This allows the investment in alternative assets to allocate 1% to 2% of funds to its own Bitcoin spot ETF “IBIT,” which is expected to create new demand for the ETF.
(Background: BlackRock CEO: Bitcoin is a safe haven asset amid global pessimism, with institutional investment accelerating towards $700,000)
(Additional context: BlackRock’s most successful ETF issuance: IBIT raised $50 billion, Bitcoin challenges gold status in 2025)
According to Bloomberg, BlackRock’s investment outlook indicates that the firm is permitting the addition of the Bitcoin spot ETF to its $150 billion model portfolio products, allowing for an allocation of 1% to 2% of funds to its own $48 billion Bitcoin spot ETF “IBIT.”
Although this represents only a small portion of BlackRock’s overall model portfolio business, this move opens a potential new demand channel for IBIT amid a gloomy cryptocurrency market. The model portfolios package various types of portfolios into ready-made strategies to be sold to financial advisors, which has developed rapidly in recent years. Adjustments in holdings could lead to significant inflows or outflows of capital.
Michael Gates, Chief Portfolio Manager of BlackRock’s Target Allocation ETF Model Portfolios, stated:
“We believe Bitcoin has long-term investment value and may provide a unique source that helps diversify risk in the portfolio.”
The high volatility of Bitcoin is the core reason why BlackRock has set its investment weight between 1% and 2%. In a report from December 2023, BlackRock’s investment research indicated that exceeding a 2% allocation would significantly increase the risk proportion of Bitcoin in the overall portfolio.
IBIT Expected to Attract More Demand
IBIT, which is set to launch in January 2024, has already become one of the most successful ETFs in history, attracting over $37 billion in inflows last year. Despite a recent cooling in market demand, with a net outflow of $900 million in the past week, BlackRock noted that financial advisors still have strong demand for Bitcoin allocation within model portfolios.
Eve Cout, Head of Portfolio Design and Solutions at BlackRock’s U.S. Wealth Management, pointed out that investors generally seek to increase their allocation to alternative assets, but they need guidance on how to determine the scale, expand investments, and rebalance.
