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- Coinshares has advised allocating 4% of their portfolio on Bitcoin
- BTC has investment performance which is somewhat similar to those of the successful start-up tech stocks in the world
- Bitcoin is up by approximately 60% year to date and is currently trading at $11,606.90.
Coinshares has advised its investors to put 4% of their total portfolio in BTC shares. Why? Because according to Coinshares, Bitcoin in its growth phase acts like any other tech stock. Coinshares is a London based digital asset management firm. An investment of 4% on BTC may result in greater returns and greater decorrelation as per the firm’s investment strategist James Buterfill while he was discussing his research.
With a #risk profile similar to that of a technology stock investors allocating 4% of portfolios to #bitcoin could see enhanced returns and greater decorrelation said our investment strategist James Butterfill while discussing his research with @FETrustnet https://t.co/D3PICEFW0h
— CoinShares (@CoinSharesCo) August 11, 2020
BTC Increases By 60% Year To Date
Unlike other companies who suggest investing 1% of their portfolios, Coinshares has advised allocating 4% of their portfolio on Bitcoin and here’s the reason:
The major tech stocks like Amazon, Facebook, Apple and Google may have done pretty well since the March’s crash, but Bitcoin is not lagging in the race. In fact, Bitcoin is up by approximately 60% year to date and is currently trading at $11,606.90.
Moreover, it has also hindered Amazon’s price rally and Nasdaq’s stock value appreciation (which stands at 22% year to date).
Bitcoin’s Value Could Be Huge If It Unleashes It’s True Potential
Buterfill in a report wrote that Bitcoin started its price from zero and it is not surprising that BTC has investment performance which is somewhat similar to those of the successful start-up tech stocks in the world. He further wrote that as a disruptive technology BTC’s risk profile resembles that of technology stock. If Bitcoin is to unleash its true potential its value could be stellar. However, at the same time, there’s also a possibility of it failing totally, leaving its value close to zero, indicating the amount of risk that is also involved in BTC investments.
4% Investment Optimal For 60/40 Portfolio
Moreover, according to the digital assets management company, Bitcoin is starting to mature into a store of value which did not happen with BTC in the past. It observed that the optimal portfolio weight for BTC is just under 4% for the conventional 60/40 portfolio. However, the report concludes with the fact that Bitcoin is an asset that is still in its infancy. As the maturation process for BTC continues, its robustness increases simultaneously. And so is the risk of failure which moves away from zero. Coinshares believes that investors will start treating BTC differently than the other assets leading to macroeconomic behaviour.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
