BlackRock says Bitcoin and liquid alternatives gain appeal as 60/40 portfolio loses its edge

BlackRock said advisors should consider Bitcoin, gold, and alternative strategies as portfolio diversifiers as stock and bond correlations remain elevated in the current market regime.

In a May 6 report titled How to diversify with bitcoin, gold and alternative investments, the asset manager said geopolitical and economic shocks have made traditional portfolio construction less reliable. BlackRock said the role of bonds as a stock market diversifier has weakened since 2020, with both volatility and stock bond correlations rising compared with the 2010s.

The firm said alternative assets and strategies with low correlations to traditional markets may help reduce portfolio risk without giving up upside. It highlighted digital assets, precious metals, and liquid alternative strategies as potential sources of diversification for advisors.

BlackRock said the iShares Bitcoin Trust ETF, which tracks Bitcoin’s price, has shown lower correlation to equities than traditional asset classes. The report said Bitcoin’s correlation to the S&P 500 stood at 0.53 from 2022 through the first quarter of 2026, while gold’s correlation to stocks was 0.19.

The firm also said combining gold and Bitcoin could create stronger diversification benefits because the two assets have shown low correlation with each other. BlackRock’s analysis found that Bitcoin and gold had a correlation of 0.10 from 2022 through the first quarter of 2026.

The report expands on BlackRock’s broader Bitcoin portfolio framework. BlackRock has said in the past that a 1% to 2% Bitcoin allocation may be reasonable for multi asset investors who believe adoption will continue and can tolerate sharp drawdowns. The firm said allocations above that range could sharply increase Bitcoin’s contribution to overall portfolio risk.

BlackRock has also described Bitcoin as a unique diversifier because its long term return drivers differ from traditional risk assets. The firm said Bitcoin’s adoption trajectory may be tied to concerns around monetary stability, geopolitical stability, US fiscal sustainability, and political stability.

The latest report says BlackRock’s Target Allocation with Alternatives models use exposures to gold and Bitcoin, along with liquid alternatives, as diversifiers.

The firm said most alternative allocations are funded from fixed income, but Bitcoin is treated differently because of its higher volatility profile. BlackRock said Bitcoin is more appropriately funded from equities and that a small allocation can go a long way.

Bitcoin fell 2% on the day to trade near $79,900 at press time, losing momentum after briefly climbing above $82,000 on Wednesday morning. The pullback came as traditional markets also eased after a strong move higher over the past month.