Bitcoin has bounced back after plunging under $80,000 per bitcoin, sparking fears the bitcoin price could be headed a lot lower.
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The bitcoin price has climbed back to around $85,000 per bitcoin but remains at a “critical juncture” as a perfect storm sweeps the crypto market.
Now, as traders yank a record amount from bitcoin exchange-traded funds (ETFs), the world’s largest asset manager BlackRock has added bitcoin into its $150 billion model-portfolio ecosystem for the first time—described as a “big deal” by one analyst.
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“This is a big deal because this is the first of those models to add bitcoin,” James Seyffart, ETF analyst at Bloomberg Intelligence, told Coindesk, adding, “it probably won’t be the last.”
BlackRock is adding a 1% to 2% allocation to the IBIT iShares Bitcoin Trust ETF in its target allocation portfolios that allow for alternatives and are aimed at investors with higher risk tolerance.
BlackRock led a campaign to get a spot bitcoin ETF approved in the U.S. through 2023, with a fleet of bitcoin funds making their debut in January 2024 before surging to become some of the fastest growing ETFs of all time.
U.S. spot bitcoin ETFs broke $100 billion in net assets for the first time in November, led by BlackRock’s $48 billion iShares Bitcoin Trust (IBIT), giving those holding it exposure to its near-600,000 bitcoin.
“We believe bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios," Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite, wrote this week in investment commentary seen by Bloomberg.
However, Seyffart said that as bitcoin is such a divisive asset, "I don’t know if or when they would add IBIT to their primary models that have a lot more money tracking them.”
Last month, Abu Dhabi’s $1 trillion sovereign wealth fund revealed it purchased $436 million worth of BlackRock’s bitcoin ETF during the final quarter of last year, kicking off a global adoption “race” amid calls for the creation of a strategic bitcoin reserve to reduce the U.S.’s spiraling, near-$36 trillion national debt.
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The bitcoin price rebound—coming as the latest U.S. inflation data in the form of the personal consumption expenditures (PCE) index came in at expectations, boosting the chances the Federal Reserve will resume its planned series of interest rate cuts—has emboldened bullish traders and analysts.
“With PCE aligning with expectations and inflation concerns balanced by upcoming rate cut prospects, bitcoin may finally get the catalyst it needs to break out of its current $80,000 to $85,000 range and push toward the coveted $100,ooo psychological level,” Matt Mena, crypto research strategist at crypto ETF issuer 21Shares, said in emailed comments.
“ETF inflows continue to build momentum, institutional demand is growing, and with regulatory clarity improving, bitcoin is on the verge of another major leg up. If this breakout occurs, it could open the door for an accelerated price discovery phase, further solidifying crypto’s role in the broader macro landscape.”