Brazil’s Largest Asset Manager Recommends Investors Put Up to 3% of their Money in Bitcoin to Hedge Against FX, Market Shocks

Core Insights - Itáu Asset Management recommends investors allocate 1% to 3% of their portfolios to bitcoin due to its lack of correlation with traditional local assets, making it a useful diversification tool [1][2] - Other major asset managers, such as Bank of America and BlackRock, have also suggested bitcoin allocations, with Bank of America allowing up to 4% and BlackRock recommending 2% [2] - The approach emphasizes bitcoin as a complementary asset rather than the core of a portfolio, aimed at absorbing shocks from currency depreciation and global volatility [2][3] Investment Strategy - Eid advises a disciplined, long-term investment mindset, suggesting that a small, steady exposure to bitcoin can act as a partial hedge and provide access to global returns [4][5] - The recommendation includes setting a strategic allocation of 1% to 3% of the total portfolio and maintaining a long-term horizon to avoid reacting to short-term market fluctuations [5] - Bitcoin's price has experienced significant volatility, reaching nearly $125,000 before falling to around $90,000, with local investors facing additional challenges due to currency fluctuations [3][4] Market Context - Bitcoin ETFs, such as BITI11 traded in Brazil, have seen performance affected by the weakening local currency, but the global nature of bitcoin offers some insulation during periods of market stress [4] - The recommendation reflects a broader trend among asset managers to incorporate cryptocurrencies into investment strategies as traditional asset correlations become less reliable [2][4]