BlackRock to allocate up to 2% of model portfolio to IBIT Bitcoin ETF

BlackRock, the world’s largest asset manager with over $10 trillion in assets under management, is incorporating Bitcoin into its own model portfolio.

According to a Bloomberg report on Feb. 28, the asset manager will allocate 1% to 2% of its Bitcoin (BTC) exchange-traded fund to target model investment portfolios. These allocations, sourced from the BlackRock iShares Bitcoin Trust ETF under the ticker IBIT, will be directed toward the company’s portfolios that include alternative investments.

In the investment world, model portfolios are pre-structured funds designed to offer ready-made strategies. They provide managed investment strategies that invest in fund shares and are marketed to financial advisors.

Model portfolios have seen significant growth across the market, driven in part by rising interest in digital assets and crypto exchange-traded products.

BlackRock’s IBIT is currently a $48 billion spot Bitcoin ETF, holding 576,046 bitcoins, which accounts for about 2.9% of the total Bitcoin market share. According to Bloomberg, BlackRock plans to allocate 1% to 2% of IBIT into its $150 billion model portfolio.

Although this $150 billion pool represents a small portion of BlackRock’s overall model portfolio business, the inclusion of IBIT could significantly boost demand for the spot Bitcoin ETF.

Michael Gates, lead portfolio manager for target allocation ETF models at BlackRock, reiterated the company’s confidence in Bitcoin as an investment.

“We believe Bitcoin has long-term investment merit and can potentially provide unique and additive sources of diversification to portfolios,” Gates said in a note to investors on Feb. 27.

The U.S. Securities and Exchange Commission approved IBIT and several other spot Bitcoin ETFs in January 2024. BlackRock, Fidelity Investments, WisdomTree, and VanEck were among the firms that received regulatory approval for the listing and trading of Bitcoin ETFs.

Investor demand for these funds helped push Bitcoin’s price above $69,000 in March 2024. Later, heightened interest amid the U.S. election cycle propelled Bitcoin to an all-time high above $109,000.

However, a sell-off has since driven BTC down to $79,000, with significant outflows from spot ETFs, including IBIT, in the past week.