Top Brazilian Bank Says Bitcoin Can Protect Against Currency Collapse

TLDR

• Brazil’s largest private asset manager, Itaú Asset Management, recommends investors allocate 1% to 3% of portfolios to Bitcoin
• The recommendation positions Bitcoin as a hedge against Brazilian real currency depreciation and market volatility
• Itaú’s guidance aligns with US banks like Bank of America (4% allocation) and BlackRock (2% allocation)
• Bitcoin reached nearly $125,000 in 2024 before dropping to around $90,000, with Brazilian investors facing additional currency fluctuation impacts
• The bank warns against market timing and emphasizes long-term, disciplined investment approach

Itaú Asset Management, Brazil’s largest privately-owned asset manager, has told investors to put between 1% and 3% of their portfolios into Bitcoin. The recommendation comes from Renato Eid, head of beta strategies and responsible investment at the bank.

The guidance positions Bitcoin as a tool to protect against Brazilian real depreciation and global market shocks. Eid wrote that Bitcoin’s lack of correlation with traditional local assets makes it useful for diversification.

Itaú’s recommendation matches guidance from major global financial institutions. Bank of America recently approved wealth advisors to recommend Bitcoin allocations up to 4%. BlackRock has pointed to a 2% allocation for investors.

The Brazilian bank faces different conditions than US counterparts. Brazilian investors deal with currency fluctuations on top of Bitcoin’s price swings.

Bitcoin climbed to nearly $125,000 in 2024 before falling back to around $90,000. For Brazilian investors, the volatility was amplified by the weakening real against the dollar.

Products like BITI11, a Bitcoin ETF traded in Brazil, saw their performance in reais affected by the currency movements. During stress periods in late 2024, Bitcoin’s global nature provided some protection against local currency problems.

Itaú analysts said investors face dual challenges from global price uncertainty and domestic currency fluctuations. They argue these conditions require new portfolio construction approaches.

The bank described Bitcoin as having a “hybrid character” that sets it apart from traditional assets. Part high-risk asset and part global store of value, Bitcoin offers resilience that fixed income can no longer guarantee, according to the bank.

Itaú emphasized that Bitcoin should remain a complementary holding rather than a core position. The allocation should be calibrated to each investor’s risk profile.

The objective is capturing returns not tied to domestic economic cycles. The allocation also aims to provide partial protection against currency depreciation while maintaining exposure to long-term appreciation.

The bank pointed to Bitcoin’s low correlation with traditional asset classes. An allocation of 1% to 3% can enhance diversification without overwhelming portfolio risk, according to their analysis.

Eid warned against trying to time the market. He suggested a disciplined, long-term approach instead.

The recommendation calls for moderation and discipline. Investors should set a strategic allocation, maintain a long-term horizon, and resist reacting to short-term price movements.

Itaú said that in a world of shortening economic cycles and more frequent external shocks, Bitcoin’s global and decentralized nature offers distinct advantages. The bank noted that traditional asset correlations are becoming less reliable, making alternative hedging strategies more important for Brazilian investors.

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