BlackRock appears to be even more Bullish on Bitcoin than many thought. Even encourages people to radically change their savings portfolio.
BlackRock is very bullish on Bitcoin
In a report from BlackRock, they share that they are indeed very bullish on Bitcoin and its future potential. This is despite it historically being a very volatile asset. Very volatile assets, assets that very rapidly increase or decrease in price, are normally avoided and hardly ever associated with long-term savings. At least not outside of the crypto space.
Although Bitcoin has extremely large volatility, the pronounced positive skewness leads to large allocations and dominates in the utility function. -BlackRock report
BlackRock´s asset manager even shares what they recommend to be the optimal breakdown of a savings portfolio. Their recommendations are something I think will radically change people's portfolios if it is followed. And the main reason for it is that they recommend that your portfolio consists of 84.9% Bitcoin. Yes, you read that right, 84.9% so way more than half. Is it even very close to a portfolio of only Bitcoin. The remaining percentage of your portfolio is divided into two, stocks and bonds. And they should be allocated according to this, 9.06% in stocks and the remaining 6.04% should be in bonds.
This recommendation would have some world-changing effects if it were to happen.n I found some data on US citizens' savings from 2021. And according to that, they keep around 40% on average invested in stocks. And they, of course, have a heavy preference for US stocks compared to other international stocks. And if you are curious about the full breakdown, you can read it here. The site has a nice breakdown of all age brackets. It also shows that both young and old have an around 25-29% of their portfolio consisting of cash. This number drops as people get older until they get around in their 70ies, and there is an increase again.
If we now use the American savings numbers as a representation of people in general, simply to be able to do a thought experiment. We can see some interesting things. If BlackRock's suggestion were to be followed. We would see an immense shift in assets. Foremost the values of most stock companies would drop as people shifts their portfolios from around 40% stocks to just 9% stocks. That would mean a removal of 75% of all money invested in the stock market. And more so, it would most heavily affect American companies due to the preference there. One would only hope that the massive stock sell-off takes place over a prolonged period of time. If not it would most likely trigger a financial meltdown and crisis unlike any we have seen.
But what about Bitcoin?
Well, x user Joe Burnett has done a similar thought experiment regarding Bitcoin. And he has arrived at some interesting numbers indeed.
Using an estimated global wealth of $800 trillion, if you then were to use the 84.9% Bitcoin allocation that BlackRock is recommending it would put the per coin value of Bitcoin at a staggering $190 million per coin. A number that quite simply is completely crazy to imagine. But this might actually not be a "high" enough per coin value. Why so you might ask. Well simply because the availability of Bitcoins to buy might not be that great. If we take a look at the data we see that over the last year, 78% of the Bitcoins held have been just that held. Meaning they have not moved from their wallets.
This is something that is called the "Crypto Multiplier" effect. And in short, it materializes as an multiplayer when a lot of people are HODLing a cryptocurrency. And it is also in effect when a lot of people are trying to sell at the same time. This is part of what makes crypto so volatile. Its topic is quite interesting and might be one I will delve further into at a later date. X user Satoshi is using the Crypto Multiplier of 3.7 regarding Bitcoin. I tried to find out where it was derived from but where unable to find the source. But if we simply use this multiplier if would mean that we potentially could see a Bitcoin price per coin of, hold on to your socks here, because this might blow you right out of them, $703 million dollars per coin. Yes, you read that correctly. $703 million dollars per Bitcoin. Yea, try and process those numbers.
What would a more realistic future for Bitcoin look like?
While $703, or even $190 million per Bitcoin would be truly amazing. I for one do not think it is realistic. Well, at least not in the near future. But let us try and think about what might happen instead. We know that BlackRock and many with them have applied to the SEC for Bitcoin ETFs. And their final deadline looks to be set for 2024.
And this deadline is set to take place around a month and a half before the Bitcoin halving is scheduled to take place. As it is looking like it will take place on April 26 next year. And assuming these ETFs will get approval, which I think they will get. If anything we might see a delay or two. They will most likely need to stock up on Bitcoin. Or many of them will not have any assets to base their ETF off of. And that coupled with the Bitcoin halving might mean we are in for one hell of a ride in the coming bull run.
And if you remember I talked about the Crypto Multiplier as well and how it is affecting crypto assets that get HODLed. With the majority of Bitcoin currently just being hold, I can imagine that this multiplayer will have an even greater effect when so much new capital will enter the market more or less all at once, trying to buy every little Satoshi they can get their hands on. And just before the Bitcoin halving gets to add its effect to the mix. As it traditionally takes some time for it to do so. But it would most definitely give the BlackRock Bitcoin ETF an extremely successful start. More or less guaranteeing its success and that people will throw their money at BlackRock again.
This all just might be the perfect storm that unleashes the mother of all bull runs. And while this might not be the initial reason that BlackRock was so bullish on Bitcoin back in 2022. That they recommend people radically change their savings portfolio. It might just be the thing that makes BlackRock BlackRock. If they say something they do not take any chances of it not coming to fruition. They will take charge and make what they say, will it into existence if you so will. With that, I will bid you adieu!
I would love to hear your thoughts on this, do you think BlackRock where fully aware of the timelines of all of this? Or are they simply that lucky? Personally, the more I look at them, the less luck I think is involved. They appear to have great analytical minds that can find this golden opportunity. And then BlackRock with its immensely deep pockets can make them come true. But please let me know what you think about this, and I would love to hear what you think about my new BlackRock tinfoil hat.
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