Author: Suzanne McGee, Reuters; Compiler: Deng Tong, Golden Finance

Asset management giant BlackRock said in a report on Thursday that it recommended that interested investors consider adding 2% of is allocated to Bitcoin, the world’s largest cryptocurrency.

A team of four BlackRock executives including ETF chief investment officer Samara Cohen and BlackRock senior portfolio strategist Paul Henderson "We believe investors with appropriate governance and risk tolerance can incorporate Bitcoin into multi-asset portfolios," the Investment Institute said in a short-selling report.

Arguments supporting the inclusion of Bitcoin in asset allocation models include that it may have lower correlations with other major asset classes and that it can provide a diversified source of returns.

“Investors should also be wary of Bitcoin’s risks,” the report warns. “It may ultimately fail to gain wider adoption. And it remains highly volatile and prone to sharp sell-offs.” Additionally, sometimes Its returns are more closely tied to those of stocks and other risky assets, meaning investors may not be able to count on it as a hedging tool.

BlackRock was one of 10 companies to launch new Bitcoin-related exchange-traded products in January, the most successful ETF launch in the history of these products, with assets More than $100 billion.

The majority of these assets have flowed to BlackRock’s iShares Bitcoin Trust, which currently has $51.1 billion in assets.

BlackRock said its allocation recommendations are based on measuring the extent to which adding Bitcoin to a portfolio would increase overall risk. While the report's authors said Bitcoin is a unique asset, it is similar in some ways to a group of tech giants including Nvidia (NVDA.O) and Microsoft (MSFT.O).

BlackRock said Wednesday's sharp gains by these companies, which have an average market capitalization of $2.5 trillion, played a major role in pushing the Nasdaq Composite to a new record above 20,000 points. Close to Bitcoin’s $2 trillion or so. The firm said a large investment in these companies could be similar to owning Bitcoin in terms of overall portfolio risk.

But BlackRock warned that if the maximum recommended weighting of 2% is exceeded, "Bitcoin's share of portfolio risk becomes disproportionately large compared to an average of 7 stocks."

BlackRock’s report also noted that investors need to regularly review the “changing nature of Bitcoin,” including the speed of adoption by institutional investors, its correlation with stocks, and its volatility.