A small bitcoin addition could double a traditional portfolio’s return
- Adding a small allocation of bitcoin to a traditional portfolio can significantly boost returns
- A 5% allocation of bitcoin could have doubled the total return of a portfolio from 2014 to 2023
- Bitcoin’s volatility would only increase by 1.3 percentage points with the addition of bitcoin
- Decentralized exchanges have caught up with centralized exchanges in terms of trading volume
- Demand for digital asset custody has increased with the debut of bitcoin ETFs
- Customers and creditors of bankrupt crypto exchange FTX might expect full repayment
According to a study by Bitwise Asset Management, adding a small allocation of bitcoin to a traditional portfolio can significantly boost returns. The study found that a portfolio consisting of 60% equities and 40% bonds would have seen a return of 77.6% from 2014 to 2023. However, adding a 5% allocation of bitcoin could have doubled the total return of the portfolio to about 169%. The increase in volatility would only be 1.3 percentage points. Additionally, decentralized exchanges have caught up with centralized exchanges in terms of trading volume. The debut of bitcoin ETFs has also driven up demand for digital asset custody. Customers and creditors of bankrupt crypto exchange FTX might expect full repayment of their money.
Public Companies: Bitcoin (BTCUSD), Vanguard Total World Stock ETF (VT), Vanguard Total Bond Market ETF (BND), Coinbase (COIN)
Private Companies: Bitwise Asset Management, Uniswap, Bakkt, FTX
Key People: Ryan Rasmussen (Senior Crypto Research Analyst at Bitwise Asset Management), Gavin Michael (Chief Executive Officer at Bakkt)
Factuality Level: 7
Justification: The article provides information about a study conducted by Bitwise Asset Management that suggests adding bitcoin to a traditional portfolio can significantly boost its return. It also mentions the performance of bitcoin from 2014 to 2023 and the trading volume in decentralized exchanges. The article includes quotes from Ryan Rasmussen, a senior crypto research analyst at Bitwise, and Gavin Michael, CEO of Bakkt. The information provided seems to be based on the study and statements from the individuals mentioned, but it does not provide any counterarguments or alternative perspectives.
Noise Level: 3
Justification: The article provides information on a study by Bitwise that suggests adding bitcoin to a traditional portfolio can significantly boost returns. It also mentions the trading volume in decentralized exchanges and the demand for crypto custody. However, the article contains filler content such as the introduction and unrelated information about bankrupt crypto exchange FTX. It lacks scientific rigor and intellectual honesty as it does not provide evidence or data to support its claims.
Financial Relevance: Yes
Financial Markets Impacted: Bitcoin and cryptocurrency markets
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the potential impact of adding bitcoin to a traditional investment portfolio, highlighting the potential for increased returns. However, there is no mention of any extreme events or significant market disruptions.
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