The asset manager’s head of digital asset strategies, Matt Horne, made the statement on June 5 during the 2024 Vision conference.

Horne said that investors and advisors are diligently developing their crypto investment theories, but even a small portfolio allocation to Bitcoin can be prudent for many.

Persistent caution

Horne elaborated that many investment managers and advisors are currently formulating their thesis on Bitcoin and digital assets but have yet to invest in them. He said Bitcoin’s track record is evidence that even a small exposure can have major benefits for long-term portfolios.

According to Horne:

“Most investors are saving money, investing money with an advisor, to meet some longer-term goal [such as] retirement. A non-zero position in something like bitcoin could make sense for a lot of clients given a long-term horizon [and] position sizing that’s appropriate for their risk.”

Spot Bitcoin ETFs were introduced in the US market nearly six months ago. These funds were anticipated to be popular among advisors who preferred regulated investment vehicles for their high-net-worth clients.

However, many advisors remain cautious, citing high volatility, a lack of understanding, regulatory uncertainties, and the absence of an extensive track record as reasons for their hesitation.

Horne addressed these concerns, saying:

“We spend a lot of time arguing over the disruptive technology [thesis] or venture investing or digital gold and I think yes to all those is fine. What your thesis is is probably going to dictate position sizing and maybe where you source it from in a portfolio.”

Financial advisors generally recommend allocating a small portion, between 1% and 5%, to Bitcoin to introduce some risk to a portfolio without overwhelming it with the crypto market’s notorious volatility.

Horne said that even if Bitcoin price falls dramatically, a small exposure would not impact the broader portfolio. Meanwhile, any appreciation in Bitcoin’s value would have a significant benefit based on its historical performance, brief as it may be.

Brief history

Bitcoin’s journey began in 2009 when it was introduced by an anonymous figure known as Satoshi Nakamoto. Initially, it was largely overlooked by mainstream investors and remained within niche communities.

It wasn’t until around 2015 that Bitcoin started to gain significant attention from the broader financial community, marking the beginning of its meaningful tracking period.

Since then, the flagship crypto has experienced extreme volatility, massive price surges, and significant declines, making it a challenging asset to model and predict.

Horne said that despite bitcoin’s relatively brief history — approximately 15 years, with meaningful data only available since 2015 — it is important for investors to educate themselves about the asset due to its impact on the financial landscape.

According to Horne:

“You just have to understand why you might want to own this, understand the potential of this technology, and then position accordingly.”

However, he also cautioned that investors need to approach digital assets with a unique lens. Bitcoin’s unpredictable nature and short lifespan make it difficult to model with traditional financial tools.

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