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The recent decline in Bitcoin and altcoins is attributed to the growing interest in artificial intelligence.
At this point, AI stocks experienced sharp increases, while $BTC and other cryptocurrencies suffered sharp declines.
While many wonder when AI stocks will decline and when money will flow back into $BTC, a BlackRock executive has made some important statements.
Speaking to Yahoo Finance, a US media outlet, Robbie Mitchnick, head of digital assets at BlackRock, said that the AI boom is diminishing the appeal of Bitcoin and cryptocurrencies. According to Mitchnick, the ongoing explosion in AI is reducing the investment attractiveness of Bitcoin and the broader cryptocurrency market.
Mitchnick added that the artificial intelligence sector is currently Bitcoin’s biggest competitor.
Although AI is currently surpassing $BTC, Mitchnick stated that this is short-term and that Bitcoin will be much stronger in the long run.
“I think AI will fall behind Bitcoin in the long run. I think the current situation is short-term.”
The BlackRock executive also stated that Bitcoin is a suitable asset for diversification in investment portfolios, recommending a allocation of 1% to 2%.
Mitchnick argues that Bitcoin’s role as an investment asset has evolved and that it can be used as a complementary diversification tool in long-term investment strategies.
At this point, Mitchnick notes that allocating 1% to 2% of the portfolio to Bitcoin might be appropriate to maximize returns while managing overall risk.
Conversely, BlackRock also warns that due to Bitcoin’s high volatility, excessive allocation could significantly increase investment risk.
*This is not investment advice.