Risks in the bitcoin market are shifting from spot exchange-traded fund inflows and outflows to forced liquidation zones created by collateralised lending structures, an analysis said. As institutions spread capital across options-income products, bitcoin-backed loans and structured credit, ETF flows alone no longer show real supply and demand. The growing credit market could make specific price levels more fragile in a downturn, while macro conditions such as U.S. rates may widen spreads on bitcoin-linked debt.

BlackRock has recommended that investors allocate 1 to 2 percent of their portfolios to bitcoin, presenting a balance between improving returns and managing risk through diversification. The guidance, presented by Michael Gates, head of portfolio management for BlackRock’s model portfolios, says a small allocation can influence performance without driving day-to-day risk. BlackRock cited its iShares Bitcoin Trust ETF (IBIT) as an implementation tool.