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Blackrock and Bitcoin logo on dark background with shiny details. 3D render. MUENSTER, GERMANY – June 17, 2023
- BlackRock, the world’s largest asset manager, suggests an 84.9% optimal Bitcoin allocation, potentially driving its value to over 5x the combined worth of equities, real estate, and bonds.
- Despite Bitcoin’s volatility, BlackRock emphasizes its positive skewness, making it a prominent component in portfolios due to its utility function dominance.
Economic analysts are focusing on BlackRock’s previous reports on portfolio optimization, and what they have uncovered could reshape the investment landscape. The findings of these analysts heavily favor Bitcoin, suggesting that if the asset manager’s recommendations are followed, it could propel Bitcoin to unprecedented highs.
In April 2022, a study was conducted analyzing Bitcoin’s performance as an asset on a monthly basis from July 2010 to December 2021. BlackRock’s results reveal that for a 60-40 portfolio (60% equities and 40% bonds) with a fixed risk aversion of γ = 1.50, the recommended optimal allocation to BTC is a remarkable 84.9%. The remaining 15.1% is advised to be divided equally between equities and bonds, maintaining a 60-40 ratio.
BlackRock’s Bold BTC Allocation Proposal And Joe Burnett’s Visionary BTC Value Projection
On July 25, Joe Burnett from Blockware commented on a 2022 BlackRock report focusing on optimal Bitcoin allocation. What made this revelation all the more surprising was BlackRock’s audacious proposal – an optimal allocation of 84.9% to BTC, with a mere 9.06% in stocks and 6.04% in bonds.
“Great chart published by BlackRock. Investors with long time horizons should hold overweight equity portfolios. However, now that Bitcoin is a superior money and savings technology, investors should consider an optimal BTC allocation of 80-100%.”
Burnett quickly emphasized the significance of this recommendation, stating that if all investors were to follow BlackRock’s lead, Bitcoin’s value could skyrocket to more than 5x the total value of equities, real estate, and bonds combined. In his estimation, with the current global wealth standing at around $800 trillion, the value of Bitcoin could reach an astounding $190 million per coin.
If all investors follow BlackRock’s optimal BTC allocation, Bitcoin will be worth more than 5x the total value of all equities, real estate, and bonds.
84.9% BTC and 15.1% everything else
If total global wealth is ~ $800T today, #Bitcoin would be $190M per coin. https://t.co/oMHzVEMLIU
— Joe Burnett (🔑)³ (@IIICapital) July 25, 2023
Economist Alessandro Ottaviani echoed the sentiment, expressing.
“Soon or later, it will be clear for everyone that Bitcoin is a must have in every portfolio.”
The implications of BlackRock’s unprecedented allocation recommendation extend far beyond the realm of cryptocurrencies, raising questions about the future role of digital assets in the global economy.
From a Blackrock report of 2022 the optimal portfolio in terms of risk vs reward is:
84.9%: #Bitcoin
9.06%: Stocks
6.04%: Bonds>> Buy Bitcoin quickly and securely with PayPal, credit card or bank transfer at eToro. Visit Website
Soon or later, it will be clear for everyone that Bitcoin is a must have in every portfolio.
And for some it will be clearer and clearer that there… pic.twitter.com/V1wqMduCCh
— Alessandro Ottaviani (@AlexOttaBTC) July 25, 2023
Blackrock’s Strategic Timing And Market Impact
Amidst the excitement, investment research firm Fundstrat made a bullish projection for Bitcoin’s price on a Monday note. Their analysis indicated that Bitcoin’s price could experience an eye-watering 521% surge from current levels, potentially reaching anywhere between $140,000 to $180,000, just before the cryptocurrency’s scheduled halving in April 2024.
Crucial to Fundstrat’s prediction was the potential launch of a Bitcoin ETF, which could unleash an additional $100 million daily demand for the digital asset. This surge in demand, combined with the impending halving in April 2024 that would reduce daily mining rewards to $12 million, would create a significant disparity between buyers and sellers. Fundstrat said:
This [bitcoin ETF launch]would bring daily demand to $125 million, while daily supply is only $25 million. The implied equilibrium price would need to rise so daily supply matches daily demand. Equilibrium analysis suggests that a clearing price is $140,000 to $180,000, before the April 2024 halvening.
BlackRock’s stance on Bitcoin aligns with its acknowledgment of its extreme volatility. However, the firm emphasized that the pronounced positive skewness, referring to its potential for outsized gains, makes it an attractive asset that should be seriously considered in investment portfolios. This recognition could mark a turning point for institutional investors, who have been traditionally cautious about adopting cryptocurrencies.
Reinforcing the enthusiasm, analyst ‘PlanB‘ reposted his stock-to-flow model on July 25, confidently suggesting that the market was entering the early stages of a bull market. He posited that BlackRock’s strategic interest in Bitcoin might be aimed at acquiring the digital asset at a favorable price just before ETF approval and the subsequent full-blown bull market. The resurgence of this model on social media further demonstrates the continued interest in Bitcoin’s future potential.
#Bitcoin is in stage-1 early bull market (blue).
Of course BlackRock wants to buy cheap, just before ETF approval, and just before stage-2 full blown bull market. pic.twitter.com/rmR1PN2wJG— PlanB (@100trillionUSD) July 25, 2023
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