Not quite fake news. For sure, the mega-fund BlackRockwith $10,000 billion in assets under management, has now entered the cryptosphere. Its request for Bitcoin Spot ETFs (BTC) is the most blatant evidence of this. But that doesn’t mean of propos ultra-bullishworthy of the worst shitcoiner trying to sell his soup, it’s enough to make you wonder if there isn’t I smell a rat. Deciphering a piece of information that could be described as distortedif not fake.
85% bitcoins yes, but as part of a hyper-aggressive professional portfolio
A report by 3 BlackRock executives dating from February 2022 has resurfaced noisily on Twitter in the last 24 hours. Attentionas this 43-page document mentions, this financial advice is normally reserved for « professional, institutional, qualified investors (…) only »..
In addition to being unsuitable for retail investors lacking experience, this would therefore be a leaked documentIt’s difficult to be 100% sure of its veracity. So let’s get out the tweezers and the conditional tense, and… let’s go! Right from the introduction, the tone positive (very bullish even) is given :
« Bitcoin (BTC) returns exhibit a pronounced positive skewness (…). This significant asymmetry (…) encourages investors to add significant BTC positions to equity and bond portfolios. (…) «
Excerpt from report on Bitcoin attributed to BlackRock executives
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BlackRock offers a quasi all-in on BTC to seasoned speculators addicted to risk-taking
What has shocked the cryptosphere, and caused this confidential report to be unearthed, is a chart (below) that can potentially point to very large proportions of bitcoins in an investment portfolio.
In fact, in a portfolio based on an ratio of 60-40 in equities-bondsthe ideal allocation calculated by BlackRock’s 3-frame equation would be… 84.9% in BTC! Even a portfolio that claims to be very defensive – with a high risk aversion and a 20-80 ratio between equities and bonds – would be offered an allocation of 12,5% in the king of cryptos.
« Figure 4 shows the results. Starting with a 60-40 stock/bond portfolio, with a risk aversion of 𝛾 = 1.50, the optimal allocation in Bitcoin is 84.9%! The remaining 15.1% of the portfolio is split 60-40 between stocks and bonds. Although BTC has extremely high volatility (…), the pronounced positive skewness leads to large allocations, and dominates in the utility function. »
But don’t get carried away inappropriate! This is just one of the many mathematical calculations and models proposed in this report by BlackRock executives. Further on in the document, by varying parameters in another equation, bitcoin proportions can go down to 3.1%, or even 1.3%.. However, since we’re talking about very (very) wealthy investors professional and institutional investors, even a 1% allocation to BTC could strongly change the face of the crypto market.
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