Can Bitcoin Boost Portfolio Returns Without Increasing Risk? Bitwise’s Matt Hougan Says It Can
Bitcoin‘s (CRYPTO: BTC) volatility is well known, but Bitwise Chief Investment Officer Matt Hougan argues that when viewed within the context of a broader portfolio, the asset may improve performance without proportionately increasing risk.
In a note published by Bitwise Asset Management on June 3, Hougan questions the conventional practice of evaluating Bitcoin in isolation.
“When you think about adding Bitcoin to a portfolio, don’t do it in isolation. Think about it in the context of your entire risk budget,” he wrote.
Hougan examined several hypothetical portfolio allocations from 2017 to 2024, comparing traditional 60/40 stock-bond splits with variations that include Bitcoin.
While a 5% allocation to Bitcoin significantly increased returns, from 107% to 207%, the overall portfolio volatility, measured by standard deviation, increased …
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