Sizing up a 2025 adoption wave 

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.

We’ve heard the “increased adoption” answer plenty when asking industry players about 2025 crypto market expectations.

Beyond retail, an array of big players particularly want in on BTC, and forecasted regulatory clarity will help fuel that shift, many believe.

Though bitcoin adoption looks different for various investors, BlackRock’s guidance earlier this month gives us a sense of the buying wave that is possible.

During a busy month in which Donald Trump nominated a new SEC chair and the Fed again cut rates, some might have missed the asset management giant’s December “investment perspectives” edition.

A couple weeks back, BlackRock execs wrote that the so-called Magnificent 7 tech stocks (in a portfolio of 60% stocks and 40% bonds) each, on average, account for roughly the same share of overall portfolio risk as a 1-2% BTC allocation.

“We think that’s a reasonable range for a bitcoin exposure,” they added.

Galaxy CEO Mike Novogratz was among those who saw the guidance, reacting as follows:

Loading Tweet..

Bitwise CIO Matt Hougan noted in an X space a week or so later that the news went unnoticed by many.

It was sort of funny, Hougan added — “not just that people missed BlackRock saying you should add bitcoin to a portfolio, but all of a sudden we doubled the allocation.”

Hogan is alluding to the not-uncommon 1% allocation to bitcoin for those who have jumped into the space. A March survey found that of the financial advisers allocating to the space, 15% recommended to clients a 1% allocation. Of those saying they planned to allocate, 23% expected to start with a position of that size.

Many investors Bitwise speaks with opt for a 5% allocation, Hougan added — a level he noted would often get you laughed at a year ago.

“[It’s] not just 2% for a few people at a wealth manager; [it’s] 2% for the base rate for a portfolio across every exposure,” he noted of the BlackRock guidance. “I think it’s really significant, and if you think it’s the end of the story, you’re wrong.”

While US bitcoin ETFs have helped wealth managers wade into crypto, many still haven’t. Then there are the other interested institutions, whether it be companies, governments or pension funds.

Hougan said as bitcoin volatility goes down in a year or two, perhaps BlackRock will recommend a 5% allocation to BTC.

BlackRock execs indeed note that wider adoption and trading could make BTC’s low correlation with equities more stable — trimming the asset’s contribution to portfolio risk and enabling investors to up their position in it.

“Yet broad adoption could also mean bitcoin loses the structural catalyst for further sizable price rises,” they explain. “The case for a permanent holding may then be less clear-cut and investors may prefer to use it tactically to hedge against specific risks, similar to gold.”

Source