Crypto Bear Market and ETF Outflows

Crypto is currently in a bear market, with spot Bitcoin (BTC) ETF outflows worsening the decline. Since February 1, investors have withdrawn net funds from BTC spot ETFs for 11 of the last 13 trading days.

However, a potential catalyst to reverse these outflows may have recently emerged. Asset management giant BlackRock announced that it will begin recommending BTC in model portfolios for the first time.

According to new guidelines for clients opting into strategies that allow alternative investments, BlackRock advisors will advise a 1-2% portfolio allocation for the company’s spot BTC ETF, the iShares Bitcoin Trust ETF (Nasdaq: IBIT).

Larry Fink, the CEO, consistently speaks positively about Bitcoin in media appearances, encouraging his lead portfolio manager, Michael Gates, to embrace this shift. Gates has approved the allocation of BTC to clients’ portfolios via the company’s IBIT product.

The maximum potential for BlackRock’s model portfolios, which could include this BTC adjustment, is valued at a total of $150 billion.

Read more: Bitcoin supply may not be fixed at 21M, says BlackRock

Gates’s recommendation of a 1-2% allocation to BTC reflects the company’s “reasonable range” guidance from December, as initially reported by Bloomberg.

While some interpreted the news as encouraging, even assuming the maximum 2% allocation across the full $150 billion of BlackRock’s portfolios would yield only $3 billion in near-term buying. For context, BTC’s market capitalization stands at $1.6 trillion.

Despite the recent news, Bitcoin prices are down 10% in the past week, dropping to $80,000 over the weekend, even following a seemingly “bullish” White House crypto summit last week.