Fidelity Exec Advises to Allocate 1-5% of Portfolio to Bitcoin
Fidelity Investments’ head of digital asset strategies, Matt Horne, recommends that investors allocate a small portion of their portfolios to Bitcoin, regardless of their thesis.
In a June 4 CNBC report, Horne addressed the analysis that many traditional investors and asset managers face paralysis when considering investing in Bitcoin and the digital asset market.
Horne explained that a small allocation, typically between 1% and 5%, would be sufficient to minimize risk if Bitcoin’s value drops to zero while still allowing investors to benefit from any potential gains and use it as an inflationary hedge. He stressed the need to grasp blockchain technology’s potential and adapt accordingly.
Horne’s comments show institutional investors’ interest in Bitcoin. This interest surged following the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States in January 2024, which propelled the asset to over $70,000 per coin.
According to the latest Coinshares Digital Asset Fund Flows report, Bitcoin funds experienced $148 million in inflows for the final week of May, with monthly total inflows reaching nearly $2 billion in May alone. Since the start of 2024, Bitcoin funds and exchange-traded products have recorded over $14 billion in inflows.
The Coinshares report also mentioned that short Bitcoin also witnessed $3.5 million in capital outflows for another week, showing that ETF and ETP market sentiment for Bitcoin is still bullish. The report also found that there are over $74 billion invested in Bitcoins worldwide.
While institutional investors are paying more attention to Bitcoin and other crypto assets, Horne’s suggestion of investing just 1% of their portfolios on BTC may be more applicable at the moment. Investing in the right place helps investors benefit from the new-age asset and reduce associated risks.
Also read: Bitcoin Could Reach $100K by 2024, Says Galaxy Digital CEO
