Financial giant Fidelity Investments recommends investing at least 5% of its portfolio in Bitcoin BTC
While some publicly traded companies like Square or MicroStrategy have publicly stated that they have invested millions and even hundreds of millions of dollars in Bitcoin BTC, finance giant Fidelity Investments is releasing a new report recommending investing 5% in the number one cryptocurrency of the crypto sector.
In a detailed report, Fidelity Investments discusses the importance of diversifying its investments, especially in alternative investments like Bitcoin.
Fidelity is one of the largest asset managers in the world with $3.3 trillion in assets under management as of June 2020 and a combined total asset value of $8.3 trillion.
We are not talking about billions but trillions in asset management for clients around the world!
5% is therefore the portion of an investor’s portfolio that should be allocated to Bitcoin BTC according to this report from Fidelity Investments.
Given bitcoin’s volatility relative to other assets, an allocation to bitcoin may deviate from its target allocation frequently, which requires an active rebalancing strategy. This requires investors to pay attention to actual versus target allocations on a more regular basis.
Consider a portfolio with a target allocation of 5% bitcoin.
If bitcoin’s allocation rises to 10% of the portfolio due to its outperformance relative to other assets, a disciplined rebalancing strategy would dictate selling bitcoin to bring its allocation back to the 5% target and using the funds to increase the allocation to other asset classes, which have drifted below their target allocation.
If bitcoin underperforms and declines to 1% of the portfolio, investors would buy bitcoin and sell their position in other asset classes that are above their target allocation. An advantage of rebalancing is that it forces investors to have the discipline to buy low and sell high.”
Denigrated for a long time by institutional investors, Bitcoin cryptocurrency is therefore now recommended by the greatest of finance as a reliable investment and above all interesting from a return on investment point of view.
Hedge fund manager and billionaire Paul Trudor Jones had also announced that he was investing part of his capital in Bitcoin, which he considers to be the best safe haven against the threatening inflation.
Over time, new institutional investors are therefore taking the plunge and investing in Bitcoin.
Clearly, a wave of investment in Bitcoin is to be expected in the future, a “tsunami” as Tyler Winklevoss, co-founder of the Gemini crypto exchange, announces.
While the Bitcoin price has yet to react to this news and substantial investment in BTC from some companies, the price of Bitcoin should eventually take off if this wave of investment is confirmed soon.