Bitcoin
Matt Horne Recommends 1-5% Portfolio Allocation to Bitcoin
Matt Horne, head of digital asset strategies at Fidelity Investments, recommends that investors allocate a small portion of their portfolios to Bitcoin regardless of their investment in the decentralized currency. In a June 4 CNBC report, Horne addressed the analysis paralysis many traditional investors and asset managers face when considering investing in Bitcoin and the digital asset market.
Horne explained that a small allocation, typically between 1% and 5%, would be enough to minimize risk if Bitcoin’s value falls to zero, while also allowing investors to benefit from any potential gains and use them as an inflationary hedge. He emphasized the need to understand the potential of blockchain technology and adapt accordingly.
Horne’s comments show institutional investors’ interest in Bitcoin. This interest increased 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 with experience $148 million in inflows in the last week of May, with total monthly inflows into Bitcoin funds reaching nearly $2 billion in May alone. Since the start of 2024, Bitcoin funds and exchange-traded products have recorded more than $14 billion in inflows.
The Coinshares report also mentioned that Bitcoin short funds were also witnessed. $12.3 million in capital outflows in May, showing that ETF and ETP market sentiment towards Bitcoin is still bullish. The report also found that there is more than $74 billion invested in Bitcoins worldwide.
Although institutional investors are paying more attention to Bitcoin and other crypto assets, Horne’s suggestion to invest just 1% of their portfolios in BTC may be more applicable at the moment. Investing in the right place helps investors benefit from the new-age asset and reduce the associated risks.
Read too: Fidelity Spot Ethereum ETF Added to DTCC List; Awaits regulatory approval