At the 2024 Vision conference, a cryptocurrency investment conference for advisors hosted by the Digital Assets Council of Financial Professionals, Matt Horne, head of digital asset strategies at Fidelity Digital Assets, advocated for a small allocation to Bitcoin in investment portfolios.
Horne suggested that some investors may be overcomplicating their approach to Bitcoin. He argued that regardless of an investor's specific thesis on BTC, a small portfolio allocation is likely appropriate. “You can have more than one investment thesis on Bitcoin, and that's okay,” Horne said.
He added that most investors are saving money to achieve a long-term goal such as retirement, and that a non-zero position in Bitcoin could make sense for many clients given a long-term horizon and appropriate position sizing for their risk.
Bitcoin ETFs entered the US market almost six months ago, providing advisors with regulated funds to direct their wealthy clients to invest in Bitcoin. However, many people have avoided investing for a variety of reasons, from high volatility to mistrust, lack of understanding of the asset class, regulation, and lack of track record. Horne believes all of these arguments are valid whether an investor views BTC as disruptive technology, venture investment, or digital gold.
“If (in the worst case) it goes to zero, the impact on the broader portfolio will be minimal due to the size of that condition,” Horne explained. “If it does what most of us expect, it increases in value over time, then you want to ensure that your clients are exposed to that risk.” .”
Horne acknowledged that Bitcoin's short lifespan, being about 15 years old and probably only worth tracking in the years after 2015, makes modeling it nearly impossible. But he doesn't see this as a problem. The important thing, he says, is that advisors and investors are educated about this new area of investing. “With digital assets, you don't have that luxury, and I think that's okay,” he added.
*This is not investment advice.