Itaú’s asset unit backs a 3% Bitcoin slice for Brazilian portfolios, targeting diversification and FX defense

Brazil’s biggest private lender is putting a number on crypto exposure. In a new research note, Renato Eid—who leads beta strategies and responsible investment at Itaú Asset Management—argues Brazilian investors should consider a 3% allocation to bitcoin. The pitch is twofold: broaden portfolio risk sources and add a cushion against local-currency shocks.

This is a notable signal from Latin America’s largest private bank. A small, rule-based bitcoin sleeve inside a traditional portfolio often changes the risk/return geometry more than its size suggests. For a BRL-based allocator, BTC introduces exposure tied to a non-sovereign, digitally scarce asset priced in dollars. That blend can help when domestic assets and the real move together.

Why 3% works in practice - It’s big enough to matter, small enough to survive. A 3% weight can contribute meaningfully to long-horizon returns without dominating drawdowns. When crypto volatility bites, the loss is tolerable; when momentum returns, rebalancing captures convexity. - It complements FX risk. Brazilian investors face periodic BRL stress. Because bitcoin trades globally and is quoted in USD, it can behave like a partial hedge when local currency weakness aligns with global liquidity cycles. - It encourages discipline. A fixed, low-single-digit target makes quarterly rebalancing realistic—selling strength, buying weakness—rather than market-chasing.

Eid frames bitcoin as an additive diversifier and a form of currency protection. That framing resonates in Brazil, where investors often juggle equity beta, real estate, and fixed income anchored to domestic policy. Bitcoin’s supply schedule and network-driven monetization story create a return stream that doesn’t hinge on Brazilian growth, local earnings, or the Selic path. While correlations do spike under stress, BTC’s long-run drivers have been sufficiently distinct to justify a small structural sleeve.

My take: the smallest edge is behavioral Technological and market structure arguments matter, but behavior often decides outcomes. A 3% policy weight subtly rewires decision-making: it reduces fear-of-missing-out near tops and regret-aversion near lows, because the stake is pre-defined. It also makes rebalancing psychologically acceptable; investors are more willing to trim a winner or add to a loser when the position is intentionally capped. That discipline may be the real source of value over a full cycle.

Business and governance considerations for a bank-led push are obvious. Normalizing a 3% target can catalyze demand for spot products, segregated custody, and transparent fee structures. It also raises suitability obligations: advisors need to communicate scenario ranges, liquidity characteristics, and the possibility that bitcoin underperforms for multi-year stretches. Clear conflicts policies are essential if the institution both recommends and distributes crypto products.

Risks remain. Bitcoin’s drawdowns can exceed 70%, policy narratives can shift abruptly, and correlation benefits aren’t guaranteed when global deleveraging hits. None of that invalidates a low-single-digit allocation; it informs how you implement it: segregated custody or regulated spot vehicles, quarterly or semiannual rebalancing, pre-set loss thresholds, and ongoing review of the thesis and sizing.

For Brazilian portfolios built around domestic fixed income and equities, a 3% bitcoin sleeve—as Itaú’s Eid outlines—can provide a distinct risk factor and partial FX defense without overwhelming the whole. The move isn’t a bet-the-farm call; it’s portfolio engineering in a market where currency cycles and concentration risk are a fact of life.