The Bitcoin craze has never been more real than in the past few weeks. With the flagship cryptocurrency’s price surging past market expectations, many old retail and institutional investors are doubling down on their investments as new investors rapidly join the cryptocurrency ecosystem.

The recent Bitcoin price surge has driven even governments to be interested in Bitcoin, with the US leading the growing number of governments considering establishing their own Bitcoin reserves. While the suggestion has received mixed reactions from the public, one key institution has shown support for the potential move by the United States.

BlackRock, one of the world’s largest asset managers, has been reported to have endorsed the idea of the United States having its own Bitcoin reserve. Donald Trump has floated this idea since his campaign days, and it is in line with the President-elect’s plans to institutionalize the digital asset under his administration. 

As of this writing, BlackRock has yet to release an official statement confirming this reported endorsement. However, the firm has recommended Bitcoin in the past as a potential hedge against inflation and a diversification tool for reserves. 

Recently, BlackRock recommended that a 2% portfolio allocation is reasonable for investors who wish to add Bitcoin to their portfolios. According to the Bloomberg report, the asset manager recommended 1-2% as “a reasonable range for a Bitcoin exposure.” However, adding that any allocation larger than that “would sharply increase Bitcoin’s share of the overall portfolio risk.”

The report further explained the rationale behind the recommendation using the example of a portfolio consisting of 60% stocks and 40% fixed-income assets. It stated that any allocation between 1-2% would pose “on average, about the same share of overall portfolio risk” as an allocation to the “magnificent 7 groups of mostly mega-cap tech stocks,” which include stocks from companies such as Amazon, Nvidia, and Microsoft. 

While the Bitcoin Reserve endorsement from BlackRock is yet to be confirmed, a move like that would not be surprising from the asset manager. The firm currently manages about $11.5 trillion in assets, and it also has ties with the crypto world as it sponsors the largest BTC Exchange-traded fund, iShares Bitcoin Trust (IBIT), which holds net assets of about $54 billion. 

Satoshi Act Fund CEO and co-founder Dennis Porter has revealed that the Trump administration is already considering an executive order to formalize its proposed reserve. 

The issue of the national reserve remains a hugely divisive topic. Proponents claim that Bitcoin's decentralized nature, finite supply, and separation from traditional finance systems make it a good option for safeguarding the U.S. economy against dollar devaluation. 

Critics, on the other hand, have stated that Bitcoin’s inherent proneness to volatility might make it less than ideal when adopted on such a large scale as a national reserve.

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