As the leading cryptocurrency Bitcoin consolidates its position day by day, financial giant BlackRock has published an updated report on Bitcoin titled “Bitcoin: A Unique Diversifier”.
Bitcoin and cryptocurrency supporter BlackRock said BTC is a unique portfolio diversifier.
Stating that Bitcoin has a multifaceted impact, BlackRock argued that BTC could act as a hedge against risks that traditional assets cannot cope with and balance these risks in an environment of increasing geopolitical and economic uncertainty.
BlackRock listed the reasons for this as follows:
“1.Bitcoin is a non-sovereign asset type with characteristics such as globalization, decentralization and fixed supply, which make it fundamentally different from traditional financial assets.
2. Bitcoin's long-term performance has a low correlation with stocks and bonds, making it attractive for investment diversification.
3.Bitcoin is considered a risky asset due to its high volatility and sensitivity to regulatory changes, market sentiment, and technological advancements. However, the decentralized nature of the token protects it from many of the macroeconomic forces and events that affect traditional assets.
4.Bitcoin’s value will increase as global currency instability, fiscal sustainability, and geopolitical tensions intensify. Its fixed supply and decentralized, borderless nature could also increase future BTC demand.
5.Bitcoin has shown potential to increase investment diversification when included in investment portfolios at a modest rate. However, a larger allocation to Bitcoin could significantly increase portfolio volatility.
*This is not investment advice.