Samara Cohen, BlackRock's chief investment officer of ETFs and index investments, believes that Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) will soon find their place in model portfolios.

Cohen, who made this prediction during a recent interview with Bloomberg, believes this shift could happen by the end of this year and continue into 2025.

What Are Model Portfolios?

Model portfolios are carefully crafted baskets of different investments typically designed by financial advisors.

Morningstar, a financial services firm, describes model portfolios as a way to manage investments more efficiently. They offer a balanced mix of assets tailored to meet specific investment goals.

Financial Giants on the Move

Cohen highlighted that large financial institutions like Morgan Stanley, Wells Fargo, and UBS are conducting due diligence. Through rigorous risk analytics, they are evaluating the top two crypto assets, Bitcoin and Ethereum.

"They look at them very differently because, as we know, Bitcoin and ETH are two very different asset classes with different use cases," Cohen stated. These institutions are also examining the potential role of these assets as portfolio diversifiers.

Utility in Diversification

The utility of Bitcoin and Ethereum as portfolio diversifiers is a significant consideration. Cohen believes that by the end of this year and into next year, allocations will be made in model portfolios, which will provide a clearer picture of how investors are utilizing these crypto assets.

"We will see allocations made in model portfolios, which will give us much more of a steer as to how investors are using them," Cohen added.

Regulatory Greenlight

The U.S. Securities and Exchange Commission (SEC) has already paved the way for this transition, and in January, the SEC approved the launch of the first spot Bitcoin ETFs.

More recently, Ethereum ETFs were launched last week. This regulatory approval is a significant step towards integrating these assets into mainstream investment strategies.

Looking Ahead

As we approach the end of the year, the financial landscape is set to evolve. Major institutions are now taking a serious look at Bitcoin and Ethereum, and the inclusion of these assets in model portfolios seems imminent.

Investors and financial advisors will watch closely to see how these digital assets can enhance portfolio performance.

"We will see allocations made in model portfolios, which will give us much more of a steer to how investors use them."