BlackRock Adds Bitcoin ETF to Model Portfolio, Signaling Institutional Shift

BlackRock has integrated the iShares Bitcoin Trust (IBIT) into one of its model portfolios, marking a significant step in institutional Bitcoin (BTC) adoption. IBIT, the asset manager’s Bitcoin-holding ETF, now holds a 1% to 2% allocation in BlackRock’s target allocation portfolio designed for alternative assets.

This move aligns with BlackRock’s recognition of Bitcoin’s long-term investment potential. Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF models, highlighted BTC’s role as a novel store of value, a hedge against U.S. dollar dominance and political instability, and a key player in the digital economy’s transition. These factors, he noted, provide diversification benefits and unique risk premia to traditional multi-asset portfolios.

Bloomberg Intelligence ETF analyst James Seyffart emphasized the importance of this decision, stating that while IBIT is currently included in a smaller model, it marks the first instance of BlackRock integrating Bitcoin into any of its portfolios. He anticipates more additions in the future, though he acknowledges Bitcoin remains a divisive asset among institutional investors.

As of December 31, 2024, BlackRock’s model portfolios oversee approximately $150 billion in assets. The firm’s endorsement of Bitcoin through IBIT could drive broader institutional adoption, signaling growing confidence in cryptocurrency as an investable asset class.