BlackRock is diving headfirst into the crypto waters. The world’s largest asset manager just added its iShares Bitcoin Trust ETF (IBIT) to model portfolios, allocating 1-2% in portfolios that permit alternatives. This marks the first time Bitcoin has appeared in BlackRock‘s $150 billion model portfolio universe. Big deal? You bet.
The investment giant is treating Bitcoin as a long-term play with diversification potential. They’re keeping it conservative though—exceeding that 2% threshold would apparently make portfolio risk skyrocket. Makes sense. Bitcoin isn’t exactly known for its stability. This allocation approach is directly informed by the firm’s December research paper which indicated that higher allocation percentages would significantly increase portfolio risk.
IBIT has been a runaway success since launching in January 2024. It’s vacuumed up over $37 billion in inflows, making it the largest spot Bitcoin ETF with $48.3 billion in assets. Not too shabby.
But it’s not all sunshine—the fund just experienced $900 million in outflows in a single week, with $420 million fleeing on February 26, 2025 alone. Ouch.
This all comes while Bitcoin trades around $84,000, after swinging between $85,122 and $78,215 in late February. Quite the roller coaster. Remember when hitting $73,000 in March 2024 seemed impressive? Those were simpler times.
BlackRock isn’t just dabbling in crypto. They’re making broader moves too—reducing equity exposure, scaling back on long-duration bonds, and planning a Bitcoin ETP launch in Europe. Unlike direct cryptocurrency investments, ETFs offer simplified tax reporting for investors looking to gain Bitcoin exposure. The move specifically includes IBIT in the Target Allocation with Alternatives portfolios designed for clients with higher risk tolerance. With $11.5 trillion under management, these shifts matter.
Wall Street is paying attention. BlackRock’s Bitcoin embrace could trigger a domino effect, pushing other institutions to follow suit. It’s normalizing crypto in conventional portfolios. Radical stuff for the old guard.
For investors, this Bitcoin allocation targets portfolios with higher risk tolerance. It’s not for the faint-hearted.
But it reflects how investment landscapes are evolving. Traditional portfolios aren’t so traditional anymore. Welcome to 2025, where BlackRock puts Bitcoin in your retirement fund. Strange times indeed.
