lackRock, one of the largest investment companies, has recently released a 9 page long document to its clients regarding Bitcoin and its potential as an investment instrument as well as a portfolio hedge.
Bitcoin's Unique Characteristics
One of the important points mentioned in the report is Bitcoin being characterized as a new asset class that has never existed before, mainly due to the fact that Bitcoin is fully digital which makes it global and accessible to anyone. Moreover, the report emphasizes on the limited supply of Bitcoin making it a unique asset.
Performance History
Furthermore, BlackRock highlights the massive growth in price that bitcoin has been exhibiting in the past few years. Bitcoin has been one of the best if not the best investment decision over the past decade, surpassing most major assets and companies in market cap.
Bitcoin as a Hedge
According to Blackrock’s report, Bitcoin should be considered as a hedge to macro risks, such as inflation and devaluation of the US dollar and other fiat money. The reason behind this statement is the fact that Bitcoin’s supply is hard capped to only 21 million Bitcoin, unlike Fiat money that has unlimited supply.
Risks and Considerations
In the report, Blackrock also mentions the risks associated with investing in an asset such as Bitcoin. Mainly Blackrock talks about the high volatility and fluctuations that Bitcoin’s price goes through. Moreover, the legal risks and unclear regulation that could affect the use and the price of Bitcoin. These factors are important to take into consideration before investing in Bitcoin and other digital assets.
Bitcoin's Promise & Risks
The document prepared by BlackRock focuses on Bitcoin as an investment opportunity that should diversify a portfolio and might bring benefits due to the peculiarities of this asset. But, it also emphasizes the necessity of recognizing and evaluating the risks that come with it. This balanced perspective from a big money manager is indicative of a shift towards more institutional adoption of Bitcoin.
