The role of Bitcoin in portfolio diversification remains a controversial topic in the financial world. Some investors see Bitcoin’s ability to behave differently from traditional investments like stocks and bonds as an advantage, and therefore believe it can be used to diversify portfolios. Others, however, point to Bitcoin’s high volatility, arguing that the asset can increase portfolio risk and therefore play a limited role in terms of diversification.
At this point, the latest statement came from Jurrien Timmer, Fidelity’s Global Macro Director. In a post on his X account, Jurrien Timmer stated that the traditional 60% equities and 40% bond allocation in investment portfolios has been replaced by a 60/20/20 model consisting of 60% equities, 20% bonds, and 20% alternative assets.
Timmer stated that the traditional 60/40 stock and bond portfolio model has been replaced by the 60/20/20 model in the post-COVID-19 era, and there is no reason to change it under current conditions.
Bitcoin Among Alternative Assets!
In Timmer’s new, updated model, global equities make up 60% of the portfolio, while the remaining 20% consists of bonds and 20% of various diversified assets.
According to Timmer, the 20% portion of the portfolio allocated to alternative assets includes various assets and strategies such as gold, commodities, cash, Bitcoin, REITs, and managed futures.
Timmer stated that Bitcoin’s correlation with the S&P 500 is approximately 30 percent, while it has no correlation with US Treasury bonds, arguing that cryptocurrencies like BTC can be used in portfolio diversification.
Timmer also specifically emphasized that the study in question was not an optimized portfolio model. Describing his findings as a “roughly prepared” example of asset allocation, Timmer stated that it should not be considered investment advice.
In a previous analysis, Timmer had predicted that the power law model indicated a Bitcoin price of $300,000 by 2029.
*This is not investment advice.
