CW51: Blackrock recommends a 2% Bitcoin allocation
From Texas proposing strategic Bitcoin reserve in the state treasury to BlackRock recommending a modest 2% Bitcoin allocation for portfolios in the recent Bitcoin price surge.
Good Morning everyone
It is another exciting week and here at Berglinde Briefing as we take a look at the latest Bitcoin news making headlines!
With Bitcoin crossing the $100k mark, both government institutions and private corporations are exploring ways of integrating it into their funds management. This week, we explore BlackRock’s suggestion of a cautious 1% to 2% Bitcoin allocation in multi-asset portfolios and why such as modest allocation is beneficial.
We also have a look at the newly proposed bill in Texas for the establishment of a strategic Bitcoin reserve in the state treasury. What are the potential implications of this legislation move and how will it influence other states and nations?
What are we talking about today?
News Flash: BlackRock Advices 1 to 2% Bitcoin Allocation in Portfolios and Texas Proposes Strategic Bitcoin Reserve in State Treasury
Graph of the Week: Sellers are Exhausted: On-Chain Spend Volumes Decrease on Bitcoin’s Price Surge Above $100k Mark
Institutional Flows: Institutional Buyers are Back in Full Force
Meme of The Week: Corporate Culture For The Win
Flash 1: BlackRock Suggests a 2% Bitcoin Allocation for Portfolios
BlackRock, the world’s largest asset manager, suggests a cautious 1% to 2% Bitcoin allocation in multi-asset portfolios. The recommended range aligns with the risk profile of many portfolios holding major technology stocks as it offers a calculated entry for investors who are interested in diversification.
Why a Modest Allocation in Bitcoin?
Risk Analysis and Volatility: The unique risk characteristics and lower correlation of Bitcoin to traditional equity make it a unique driver of portfolio risk. Exceeding the 2% threshold, however, could excessively amplify the volatility of a portfolio.
Price Milestone and Fund Growth: Bitcoin has recently surpassed $100,000 after institutional endorsements and inflows into funds like BlackRock’s iShares Bitcoin trust (IBIT).
Similar Dynamics to Tech Stocks: Bitcoin’s market capitalization and utility are different from corporate assets, but its volatility patterns are similar to tech stocks on the S&P 500.
Strategic Integration: Integration of Bitcoin into portfolios should be strategic to reflect an evolving asset in institutional investment frameworks.
BlackRock compares Bitcoin investments to holding top tech stocks. While a potentially lucrative, Bitcoin investment is inherently a risky move. Its volatility and lack of cash flows are the key contributing factors to its risk profile, including dramatic surges and severe selloffs. Therefore, maintaining a conservative approach when adding Bitcoin to a portfolio is necessary to safeguard the investment while benefiting from diversification.
Berglinde’s take: If all investors would go through with Blackrock’s recommendation, we would look at a Bitcoin price of approx. USD 800’000.- looking at the overall investment universe. We’re definitely not there yet, but we believe the chances to go there are >50%. With $IBIT having as much in assets as the 50 European-focused ETFs combined, BlackRock's success in Bitcoin investment underscores the financial sector’s acceptance of crypto in comparison with Europe’s harsh crypto stance. The growing institutional acceptance of Bitcoin further represents the immense potential Bitcoin holds as a key diversification driver.
Flash 2: Texas Proposes Strategic Bitcoin Reserve in State Treasury
A new Texas bill proposes a strategic Bitcoin reserve, which would allow taxes, fees, and donations to be collected and held in Bitcoin for at least five years. The proposed legislation will potentially make Texas a pioneer state in integrating Bitcoin into government financial strategies.
Potential Impacts of Strategic Bitcoin Reserve in State Treasury
Taxes Paid in Bitcoin: The implementation of the Bill in the second-largest economy in the United States and the nation’s highest concentration of Bitcoin miners would allow miners to pay taxes in Bitcoin.
Contribution of a National Bitcoin Reserve: The proposed Bill aligns with the calls for a national Bitcoin reserve, which President-elect Donald Trump promised during his campaign.
Rise of Comparable Measures: Other states in the United States such as Pennsylvania introduced similar legislation with other states and nations considering comparable measures.
An article on BitBo suggests that Bitcoin prices surged over 45% during the U.S. elections because of speculation about the establishment of state-level and national Bitcoin reserves. If such reserves are long-term, they are likely to generate market excitement and optimism about the future role of Bitcoin in government fiscal policies.
Berglinde’s take: This move by Texas doesn’t come as a surprise—it’s simply Bitcoin’s game theory in action. The network is designed to reward early adopters, and governments are no exception. Once a few states or nations begin building strategic Bitcoin reserves, others are bound to follow to stay competitive. In the race for sound money and digital sovereignty, holding Bitcoin becomes not just prudent but inevitable. Texas, with its mining boom and forward-looking policies, is merely leading the charge. Game on!
Bitcoin Sellers are Exhausted
According to Glassnode, the latest push of Bitcoin’s price above $100k has seen on-chain spend volumes come down significantly. This is an indication that enough coins have changed hands at these prices as those who wanted to sell have already done so. The notable decrease in active coins is a clear indication of the potentially diminishing sell pressure at current price levels.
Institutional Buyers are Back in Full Force
While we saw the selling pressure decreasing, we see significant demand on the institutional buyer side again. In the last two weeks alone, the US ETF added more than USD 5bn in Bitcoin to their holdings. Especially Blackrock’s IBIT 0.00%↑ continues to deliver phenomenal numbers.
All in all we see a continuing trend of accelerating buying pressure:
Corporate Culture for The Win
