According to a report by Bloomberg, BlackRock's investment outlook shows that BlackRock is allowing the addition of a Bit coin spot ETF to its $150 billion model portfolio products, with the portfolio able to allocate 1% to 2% of its funds to its own $48 billion Bit coin spot ETF "IBIT".

Although this only accounts for a small portion of BlackRock's entire model portfolio business, this move opens up a potential new demand channel for IBIT amid a bearish crypto market sentiment, as model portfolios package various types of portfolios into ready-made strategies for sale to financial advisors, which has seen rapid development in recent years, and adjustments to their holdings could lead to significant inflows or outflows of funds.

BlackRock's Head of ETF Model Portfolio Investments, Michael Gates, stated:

We believe Bit coin has long-term investment value and may provide a unique, diversifying source for portfolios.

The high volatility of Bit coin is the core reason why BlackRock has set its investment allocation between 1% and 2%, as in a report in December 2023, BlackRock's Investment Research Institute pointed out that if the allocation exceeds 2%, it will significantly increase the risk proportion of Bit coin in the overall portfolio.

IBIT Expected to Attract More Demand

IBIT, which launched in January 2024, has become one of the most successful ETFs in history, attracting over $37 billion in inflows last year, although recent market demand has cooled, with a net outflow of $900 million in the past week, BlackRock noted that financial advisors' demand for Bit coin allocation in model portfolios remains strong.

Eve Cout, Head of US Wealth Management Portfolio Design & Solutions at BlackRock, pointed out that investors generally want to increase their allocation to alternative assets, but they need guidance to understand how to size, scale, and rebalance their investments.