Fidelity believes investors should consider small Bitcoin exposure for long-term portfolios


Fidelity
Investments
believes
that
a
modest

Bitcoin
(BTC)
allocation
could
benefit
investors
regardless
of
their
specific
perspectives
on
the
digital
asset,
CNBC
reported.

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.

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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.

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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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Author: Assad Jafri


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