BlackRock, the world's largest asset manager, is currently generating a lot of interest within the investment community with its most recent report, bitcoin-as-unique-diversifier” target=”_blank” rel=”noopener nofollow”>”bitcoin: a unique diversifier.” This paper emphasizes the potential of bitcoin as a unique asset class that can improve portfolio diversification.
crypto/2024/09/26/blackrock-report-adds-fuel-to-debate-over-bitcoin-price-correlations-calling-it-unique-diversifier/” target=”_blank” rel=”noopener nofollow”>black rock It manages assets valued at more than $10 trillion, so its advice is very important. The company maintains that bitcoin's distinctive features, such as its distributed nature and fixed number, differentiate it from other conventional financial assets.
The bitcoin exchange-traded fund (ETF) effectively launched by BlackRock currently has holdings of around $21 billion.
Originally introduced earlier this year, the iShares bitcoin Trust ETF (IBIT) has attracted a lot of investor interest. In reality, the fund has gained over $14 billion in assets, demonstrating growing conviction in bitcoin as a lucrative investment option.
A new perspective on risk
BlackRock research shows that bitcoin” target=”_blank” rel=”noopener nofollow”>bitcoin behaves quite differently than traditional risk assets. The company notes that bitcoin has shown significant volatility, but insists that its long-term performance is largely unaffected by other financial markets.
For example, bitcoin is up 22% since August 5, when the yen carry trade was eliminated, while gold and the S&P 500 have only risen modestly, about 11%.
This could suggest that bitcoin has the ability to function independently of regular market changes, making it a fairly compelling option for investors who wish to achieve certainty in their investments.
The report also highlights the fact that a significant number of bitcoin holders are making profits. According to the data, the majority of investors who have maintained their bitcoin investments for three years or more are currently profitable.
This trend indicates that there is a growing consensus among investors that bitcoin can function as a safe haven during periods of economic instability. More people are turning to bitcoin as a potential store of value as geopolitical tensions rise and trust in traditional financial institutions declines.
BlackRock: institutional change
What's notable is how reflective BlackRock's overall stance has been on institutional investors' shift toward cryptocurrencies. BlackRock CEO Larry Fink was once skeptical of digital assets, but has since realized that his skepticism toward bitcoin was actually “misguided.”
This is characteristic of the growing acceptance of cryptocurrencies by major financial organizations. As institutions increase adoption of bitcoin, its credibility and acceptance rate will increase with the entry of institutions like BlackRock, propelling it into the mainstream.
Another interesting question is whether bitcoin is a risky or riskless asset. Their short-term trading patterns seem to be leaning towards risky behavior, but the long-term data paints a different story.
Featured image from Fortune, TradingView chart
