Matt Horne, head of digital asset strategists at Fidelity Investments, advises that investors should allocate a small portion of their portfolios to Bitcoin, regardless of their investment stance on the cryptocurrency.
In a CNBC report on June 4, Horne highlighted the issue of analysis paralysis affecting many traditional investors and asset managers when considering Bitcoin and digital assets:
“It’s tough because a lot of professional investors are able to model out every asset class given the amount of data that’s at our fingertips now.
“With digital assets, you don’t have the luxury… and I think that’s fine.”
“That’s why you just have to understand why you might want to own this, understand the potential of this technology, and then position accordingly,” he added.
Horne suggested that a small allocation of 1-5% could be prudent.
This range is minimal enough to mitigate significant loss if Bitcoin’s value plummets but substantial enough to benefit from potential gains and its role as an inflationary hedge.
His remarks underscore the growing interest from institutional investors and fund managers towards Bitcoin and cryptocurrencies, which were previously dismissed by many large financial institutions.
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Institutional interest in Bitcoin and other digital assets soared after the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States in January 2024, driving Bitcoin’s value above $70,000 per coin.
According to the latest Coinshares “Digital Asset Fund Flows” report, Bitcoin funds saw $148 million in inflows during the last week of May, with nearly $2 billion in total inflows for May alone.
Since the beginning of 2024, Bitcoin funds and exchange-traded products (ETPs) have accumulated over $14 billion in inflows.
Conversely, short Bitcoin funds faced $12.3 million in capital outflows in May, indicating a positive market sentiment among ETF and ETP investors towards Bitcoin.
The Coinshares report also revealed that Bitcoin investment funds now manage over $74 billion in assets globally.
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