BlackRock recommended that investors allocate 1 to 2 percent of their portfolios to bitcoin (BTC), presenting a balance between improving returns and managing risk from a diversification perspective.

According to Bitcoin Magazine on Tuesday, BlackRock, the world’s largest asset manager with $14 trillion in assets under management, said adding bitcoin at a 1 to 2 percent level could increase the potential for improved returns without significantly raising overall risk.

The guidance was presented by Michael Gates, the lead portfolio manager responsible for BlackRock’s model portfolios. He defined bitcoin as a complementary diversification asset in a multi-asset portfolio. He explained that even a small allocation can affect returns but is not at a level that determines day-to-day risk.

Based on that assessment, BlackRock analysed that in a traditional 60-40 portfolio, a 1 to 2 percent bitcoin allocation carries a level of risk similar to adding a single large technology stock.

It also explained that bitcoin has a low correlation with stocks and bonds, allowing risk-adjusted returns to improve without greatly increasing volatility. It emphasised that the recommendation is a structural proposal based on the logic of diversification, not a short-term price outlook.

As an implementation tool, it presented its spot bitcoin ETF, the iShares Bitcoin Trust ETF (IBIT), which was added to BlackRock model portfolios for the first time. Launched in January 2024, IBIT has secured about $49 billion in assets under management and holds more than 765,000 BTC.

IBIT now accounts for about half of crypto ETF flows among registered investment advisers (RIAs) as its market share expands, and its annual fee is maintained at about 25 basis points.

BlackRock has also recently launched the iShares Bitcoin Premium Income ETF (BITA). The product is structured to generate monthly income through option selling of 25 to 35 percent of the portfolio based on IBIT exposure.

BlackRock also operates a bitcoin ETP on the London Stock Exchange, expanding global investor access. It then projected in February that even if Asian financial advisory firms allocate only 1 percent of client assets to crypto, about $2 trillion in new funds could flow into the digital asset market. The analysis is based on an assumption that Asian household assets total about $108 trillion, and it also mentioned that adoption of crypto ETFs is widening in Hong Kong, Japan and South Korea. It added that participation by Asian investors in U.S. spot bitcoin ETFs is continuing steadily.