BlackRock Recommends Gold and Bitcoin for Portfolio Diversification

BlackRock (NYSE: BLK) Investment Institute (BII) has highlighted gold and Bitcoin as key assets for diversifying portfolios in its 2025 Global Outlook report. The institute notes that traditional diversification methods, such as bonds, have been less effective in mitigating risks associated with equity sell-offs.

The report emphasizes Bitcoin's distinct value as a fixed-supply asset and its potential as a globally accepted payment system. Samara Cohen, Chief Investment Officer of ETFs and Index Investments at BlackRock, explained, "Bitcoin’s role as a store of value and payment system makes it a potential diversifier."

Bitcoin's limited historical correlation with equities adds to its appeal, although its risk-return profile could change significantly with broader adoption. "Given Bitcoin's unique value drivers, we see no intrinsic reason why it should correlate with major risk assets over the long term," BlackRock's report adds.

Gold remains an equally important component, especially as central banks globally increase their gold reserves to counter inflation. The report states, "Gold continues to serve as a hedge against inflation and an alternative to reserve currencies under pressure."

The institute further notes that market dynamics are shifting due to structural changes rather than traditional business cycles. BlackRock predicts persistent inflation, modest Federal Reserve rate cuts, and rising Treasury yields in 2025, underscoring the need for dynamic, diversified investment strategies.