Bitwise analysts, a specialized digital asset management company, shared their perspective on the amount of Bitcoin (BTC) to diversify their investment portfolio.
In the report, experts showed it Bitcoin has improved so many absolute returns such as those adjusted by the risk of traditional portfolios of actions and bonds.
“The results show that historically, adding Bitcoin to the portfolio will increase both absolute and risk-adjusted returns over all three years since 2014, and envision a strategy that will provide appropriate respect,” says an expert at Bitwise.
This report assesses the impact of adding BTC to a traditional portfolio consisting of 60% of stocks (represented by ETF Vanguard Total World Stock -VT) and 40% of bonds (represented by ETF Vanguard Total Bond Market -BND) and analyzes the period from January 1, 2014 to December 31, 2024.
In other words, analysts have studied using actual data from the 2014 period to 2024 to assign a classic investment strategy where a portion of the BTC portfolio is made up of 60% and 40% of bonds.
Particularly evaluated Currency yields were created by Nakamoto at With several possible combinations of 1, 2, and 3 year periods within that range, it aims to measure the impact on different investment periods and avoid biases to select a specific date.
Among the metrics analyzed are: The accumulated annual revenue and annual return rate indicate the total and how much the portfolio has increased annually. Volatility. Measure how different the prices are. Sharp ratio (based on 10-year financial bonuses) that assesses risk adjusted using a risk-free rate of 2.36%. And the maximum drop reflecting the maximum loss of the maximum value.
Additionally, different BTC allocations were assessed within the portfolio. The portfolio went from 0% to 10%, measuring how various reboiling frequencies (monthly, quarterly, annually, no rebalance) affected the performance of the portfolio.
Concrete is that Adding Bitcoin to your traditional investment portfolio will improve its performance.
Without BTC, the base portfolio would achieve accumulated revenue of 96% (6.32% per year) and volatility of 8.49%; Ratio Sharp Of 0.456.
So, what happens when an investor allocates 1% BTC? With Bitcoin allocation of 1%, accumulated returns increased to 115.67% (7.25% per year), volatility rose slightly to 8.59%, sharp improved to 0.557, maximum descent reached 22.73%, indicating a moderate improvement with low risk impact.
At 2.5% of Bitcoin, the accumulated returns reached 148.09% (8.62% per year), volatility rose to 8.89%, stocks rose to 0.689, with a maximum decline of 23.72%. Prominent balance between profitability and risk.
As seen in the previous table, if an investor decided to allocate 5% of the BTC portfolio, he raised the return to 210.6% (10.9% per annum), with medium volatility of 9.7% and maximum decline of 25.3%.
On the other hand, uploading the 10% allocation improved the return to 272.4%, but with greater volatility (15.8%) and significant falls (29%) were at the expense of.
It is important to note here that there were more returns with larger allocations. However, risk exposure has also increased.
The graph below shows the performance of a traditional portfolio compared to a traditional portfolio containing BTC, including 1% allocation (dark green line), 2.5% (ambient line), and 5% (clear green line).
Although the report does not recommend fixed allocation of BTC to investors, it is important to emphasize that decisions will depend on factors such as temporary horizons, frequency of rebalance, and resistance to maximum falls.
The report suggests that moderate allocations between 1% and 5% provide an attractive balance of risk and returns within traditional portfolios, particularly in the medium-term and long-term investment perspective.
Beyond that, the evolution of the price of digital assets over time has led to This is one of the best performing assets of the past decade.
Therefore, companies such as Strategy (previously MicroStrategy) have incorporated BTC into the Ministry of Finance as a reserve asset.
The company that hosts Bitcoiner Maximalist Michael Saylor is known for its aggressive BTC investment strategy.
Currently, the company in the stock market with the largest BTC in reserves is a company in the stock market totaling 528,185 BTC ($41,780 million) of total, according to data from Bitcoin’s Treasury.
For this reason, more and more companies are evaluating different strategies for issuing financial products to achieve funds and acquire BTC.
As Cryptoics reports, the well-known Texas American video game chain GameStop Board of Directors recently approved the inclusion of BTC in its corporate reserves as part of its financial strategy.
Institutional benefits also grow at the state level. In addition to El Salvador, which maintains a strategic BTC reserve, Donald Trump has signed an executive order Follow a similar path in the United States.
Why Bitcoin?
A good answer to this question is BlackRock, the world’s largest asset manager, describing digital currency as a “unique diversified asset.”
Because of that characteristic, BTC is incorporated into the investment portfolio or used it as a reserve asset It could serve as compensation for devaluation of the dollar or other fíat currencies.
As explained by Cryptonoticia, digital assets have similar characteristics to gold. First, the supply is limited to 21 million units, and if the broadcasts are halved, they will be reduced every four years. This is a factor that affects medium and long-term prices.
Furthermore, BTC is different from Fíat Money, as it has not been devalued by financial emissions or central bank decisions.
