Key Takeaways:
A one percent allocation to Bitcoin can boost a portfolio's returns by up to 30 percent, according to a new report from asset management giant Fidelity.
"Bitcoin has evolved into a major asset class, often rivaling traditional markets in size while delivering strong long-term returns," the report said, advocating for its consideration as a core component of modern investment portfolios.
The report's findings are based on back-testing a 1% Bitcoin allocation added to a traditional 60/40 portfolio, showing a significant increase in the portfolio's risk-adjusted returns. Bitcoin was trading at approximately $68,550 as of 16:00 UTC, with a market capitalization exceeding $1.3 trillion, according to CoinGecko data.
This strong endorsement from a mainstream financial giant can significantly boost investor confidence, potentially leading to increased institutional and retail capital allocation into Bitcoin. It reinforces the narrative of crypto's maturation as a legitimate asset class and may pressure competing asset managers to adopt a similar stance.
The report notes that Bitcoin's correlation to traditional asset classes like the S&P 500 and bonds has remained low, making it an effective diversifier. While Bitcoin's price is notoriously volatile, Fidelity argues that a small, professionally managed allocation can improve a portfolio's overall efficiency without adding excessive risk.
The findings come as other major financial players, including BlackRock and Ark Invest, have also launched Bitcoin-related investment products, signaling a broader acceptance of the digital asset. For context, the price of Ethereum, the second-largest cryptocurrency, was trading around $3,580.
This article is for informational purposes only and does not constitute investment advice.
