Data from BlackRock shows that adding Bitcoin to a portfolio can improve risk-adjusted returns over multiple time frames. Portfolios with a 1%, 3%, or 5% Bitcoin allocation recorded higher returns over one, two, five, and ten-year periods than traditional portfolios.
Source: BlackRock
Higher returns despite slightly increased volatility
While Bitcoin may slightly increase volatility in hypothetical portfolios, the potential for higher returns generally outweighs the risk. For example, portfolios with a 5% Bitcoin allocation achieved 19.1% returns over the long term, far surpassing the 11% returns from traditional portfolios without Bitcoin.
BlackRock’s analysis also highlights the importance of long-term holding when it comes to Bitcoin’s volatility. According to the firm, Bitcoin’s lowest return over the past four years was still 137%, and holding the asset for three years or more has always produced positive returns.
Source: BlackRock
Additionally, BlackRock compared Bitcoin to gold and US Treasury bonds, emphasizing its fixed supply, decentralized governance, and low correlation with traditional assets. This positions Bitcoin as an effective hedge against declining trust in governments and fiat currencies.
BlackRock also pointed out that while Bitcoin's volatility remains high, it has declined as the asset matures. The analysis shows Bitcoin's low correlation with gold (0.1) and the S&P 500 (0.2), further highlighting Bitcoin's role as an independent asset class.
Finally, BlackRock is highlighting Bitcoin as a hedge against the devaluation of fiat currencies, especially the US dollar. With the dollar's decline since 1913, they are positioning Bitcoin as a hedge against inflation. By offering a Bitcoin ETF, BlackRock is demonstrating its confidence in the long-term value of Bitcoin and its growing role in the financial markets.
#Write2Win #BinanceTurns7 #Write&Earn #Write2Learn #btc $BTC $SUI $APT
