Bitcoin has recovered after dipping below $80,000 per bitcoin, raising concerns that the price might decline further.
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The price of bitcoin has surged back to approximately $85,000, yet it is at a “crucial crossroads” as a perfect storm envelops the crypto landscape.
As traders withdraw a record amount from bitcoin exchange-traded funds (ETFs), BlackRock, the world’s largest asset manager, has included bitcoin in its $150 billion model portfolio ecosystem for the first time—this has been labeled a “significant event” by analysts.
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BlackRock’s CEO Larry Fink has spearheaded Wall Street’s push into bitcoin and crypto—driving the … [+]
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“This is a major milestone because it marks the first model to incorporate bitcoin,” said James Seyffart, ETF analyst at Bloomberg Intelligence, adding, “this likely won’t be the last.”
BlackRock is planning a 1% to 2% allocation to the IBIT iShares Bitcoin Trust ETF within its target allocation portfolios, which accommodate alternatives for investment with higher risk appetites.
In 2023, BlackRock led efforts to secure approval for a spot bitcoin ETF in the U.S., with several bitcoin funds launching in January 2024, quickly becoming some of the fastest-growing ETFs in history.
U.S. spot bitcoin ETFs surpassed $100 billion in net assets for the first time in November, primarily driven by BlackRock’s $48 billion iShares Bitcoin Trust (IBIT), which gives investors access to nearly 600,000 bitcoins.
“We believe bitcoin holds long-term investment potential and can serve as a unique and valuable addition to diversification in portfolios,” noted Michael Gates, lead portfolio manager for BlackRock’s Target Allocation ETF model portfolio suite, in an investment commentary reported by Bloomberg.
However, Seyffart remarked that due to the divisiveness surrounding bitcoin, “it’s uncertain if or when they would incorporate IBIT into their primary models that manage significantly larger amounts of capital.”
Last month, Abu Dhabi’s $1 trillion sovereign wealth fund disclosed that it bought $436 million worth of BlackRock’s bitcoin ETF in the fourth quarter of last year, igniting a global adoption “race” amidst discussions about creating a strategic bitcoin reserve to address the U.S.’s escalating national debt, now close to $36 trillion.
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The bitcoin price has sharply decreased from its peak following the U.S. election, as traders withdrew $1 … [+]
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The recent rebound in bitcoin prices coincides with the latest U.S. inflation data from the personal consumption expenditures (PCE) index aligning with expectations, boosting the likelihood that the Federal Reserve may proceed with planned interest rate cuts, thereby encouraging bullish traders and analysts.
“With PCE meeting expectations and inflation concerns tempered by impending rate cut prospects, bitcoin might finally receive the momentum necessary to break out of its current $80,000 to $85,000 range and approach the significant $100,000 psychological barrier,” said Matt Mena, a crypto research strategist at crypto ETF issuer 21Shares, in comments sent via email.
“ETF inflows are gaining traction, institutional interest is rising, and with regulatory clarity improving, bitcoin stands on the brink of another significant upward move. Should this breakout occur, it could initiate an accelerated price discovery phase, further cementing crypto’s position in the wider macroeconomic context.”
