In its Dec. 2024 Investment Perspectives, BlackRock Institute (BII) stated that Bitcoin will offer the greatest return potential before it is widely adopted.
The report suggests that BTC could offer substantial returns when included in a multi-asset portfolio. However, to manage the high volatility, it recommends limiting the allocation to 1%-2%. This approach helps balance the risks while benefiting from future growth.
Following this announcement, institutional investors are increasingly adding BTC to their portfolios. The cryptocurrency’s potential for high returns has caught their attention. BlackRock’s report highlights Bitcoin as an investment opportunity with long-term potential.
Its volatility has not reduced compared to the past, but investors are ready to take this risk. However, analysts have pointed out a 3-6% price increase for each $1 billion in Bitcoin ETF. This makes it probable to affirm that investors’ confidence in Bitcoin is high, and the demand is expected to increase by 2025.
Legislative developments could spur demand
U.S. legislation affects the future of Bitcoin in some way. Bills such as the Financial Innovation and Technology Act (FIT21) and the Payment Stablecoins Act are meant to establish favorable legal conditions.
However, new regulations on non-custodial wallets, crypto mining, and decentralized finance (DeFi) could attract more institutional investors. These changes would provide clarity for crypto assets projects, driving further adoption.
IBIT’s remarkable growth amid market volatility
Nonetheless, as evidenced by BlackRock’s Bitcoin ETF (IBIT), with the price volatility of Bitcoin in mind, inflows remain high. On Dec 9, IBIT invested in BTC and bought $398 million worth of it. Over seven sessions, Bitcoin ETFs recorded over $3.1 billion in inflows.
Additionally, Bitcoin’s growing adoption by institutional investors and favorable regulations are expected to drive demand in the coming years. This could reshape the crypto market and Bitcoin’s role within it.
Related: Bitcoin ETFs hit record inflow, 7-day streak opposite Ether
