Cathie Wood’s ARK Invest says that an optimal investment portfolio should hold about 20% of Bitcoin.

adminFebruary 2, 2024

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Cathy Wood’s Ark Invest said An optimal investment portfolio should have held 19.4% of Bitcoin in the past year, and such an allocation should maximize the “risk-adjusted return of the portfolio.”

ARK said in its 2024 annual Big Ideas report that Bitcoin is an essential component for investment portfolio diversification, noting that it has a five-year correlation of just 0.27 with traditional asset classes. Investing in Bitcoin is a counterbalance to traditional asset classes, he said.

“Bitcoin is not simply a new investment option, but an essential component for diversifying investment portfolios, offering unprecedented growth potential among digital assets,” he added. “Over the past seven years, Bitcoin has delivered annual returns that far outperform the major asset classes.”

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ARK Invest advocates a long-term investment strategy for BTC

Bitcoin’s short-term volatility could “obfuscate” the asset’s long-term returns, he said. Rather than focusing on when to buy BTC, investors should decide how long they should maintain exposure to the leading cryptocurrency.

Investors who held Bitcoin for at least five years “made profits regardless of when they purchased,” it said.

Given the $250 trillion global investable asset base, changes in how institutional investors allocate their portfolios could have a significant impact on the price of BTC, ARK said.

If that investor base allocates 4.8% of their assets to Bitcoin, ARK estimates that the BTC price could surge to $550,000, and if an optimal 19.4% is allocated, the price could soar to $2.3 million. Allocating just 1% would raise the price from $42,998 to $120,000 at 12:48 PM ET, he said.

The optimal allocation to Bitcoin could have an impact of more than $2 million on the price of Bitcoin. pic.twitter.com/vIFH0fCmZQ
— Yassine Elmanzra (@yassineARK) January 31, 2024