BlackRock analyst: ‘Bitcoin more digital gold than risk asset’

-->The big BlackRock has turned 180 degrees in their view of bitcoin in recent months. While the largest asset manager in the world initially had no interest in the digital currency, positive comments are now flying around our ears.

Robert Mitchnick of BlackRock, for example, sees bitcoin more as “digital gold” than a risk asset.

Blackrock says bitcoin will be a good portfolio diversifier despite its recent rally with stocks

Robert Mitchnick, BlackRock’s digital assets lead, discusses what bitcoin correlations and risk mean for investors’ portfolio construction.

Source: https://t.co/HJTY0h6Snw

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Little correlation with traditional shares?

Despite the fact that bitcoin can be volatile, Mitchnick says there is a lot less correlation with traditional stocks than many people think. According to the BlackRock analyst, the bitcoin price is much more similar to that of gold.

In recent times we have seen the narrative surrounding bitcoin move much more back to that of digital gold; especially now that the correlation with the US S&P 500 stock index is decreasing.

While Mitchnick acknowledges that bitcoin has moments where volatility can’t keep up, he sees it more as digital gold. Now that the correlation with tech stocks is falling again, the narrative of bitcoin as the digital equivalent of gold is starting to pick up again.

Perhaps we should slowly acknowledge that it is very difficult to put Bitcoin into an existing category at all. After all, we have never before had to deal with an asset with absolute scarcity.

How much bitcoin do you need in your portfolio?

Mitchnick then discusses the ideal amount of bitcoin in a portfolio. According to the BlackRock analyst, it is sufficient for many people to take an allocation of 1 to 3 percent on digital gold.

“It’s all about balance. Too much bitcoin and you’re suddenly part of the volatility rollercoaster that it can be. Just enough and you have a nice diversification for your portfolio or even protection against a possible storm,” says Mitchnick.

In any case, uncertainty is something that seems inherent to bitcoin. Although the price has now rebounded, we are seeing more and more long-term investors choosing to sell on the blockchain.

For every bullish narrative, there will always be a bearish narrative. That is something that bitcoin investors have to learn to deal with.