Yale Study Claims Every Investment Portfolio Should Hold 6% Bitcoin
A new study explains that investors should hold at least 6% of their investment in Bitcoin (BTC) due to their superior return potential.
A new Yale study by professor Aleh Tsyvinski explains that investors should at least 6% of their investments in Bitcoin (BTC) and cryptocurrencies.
Bitcoin (BTC) continues to dominate cryptocurrency space, with its boom in 2017 providing a backdrop of optimism for many bullish investors.
The hype around BTC now sees it getting endorsed by prominent figures as an investment tool.
Many Bitcoin bulls hold the view that the top crypto will eventually embark on a surging run that could see it reach prices never seen before. Some of these people include John McAfee, who famously predicted that Bitcoin could hit $1m.
However, there are others who look at its decline in 2018 as a sign of its impending demise.
Among those who have criticized bitcoin is investment guru Warren Buffet and billionaire Bill Gates. They have called for caution and in some quarters, urged total disregard.
Despite a largely anti-crypto stance from the “who-is-who” in investment, there is a trend that has seen many investors seek crypto as a way of diversifying their portfolios.
This group of investors has other assets like stocks and treasuries, but find crypto a bit attractive due to its potential to enrich the portfolio. And then there are those who cringe at the thought of investing in crypto.
It is this category of investors that the recent study by Yale economist Aleh Tsyvinski targets.
Every Portfolio should include at least 6% BTC
According to Professor Aleh Tsyvinski’s study, it’s imperative that Bitcoin forms part of every portfolio. He holds the opinion that this should be the case, even if an investor is optimistic about the virtual currencies or otherwise.
The economist opines that a good portfolio should include Bitcoin, accounting for 6 percent at the very least. He also states that for those less enthusiastic about cryptocurrency or bitcoin should strive to hold at least 4 percent as part of their portfolio.
In addition, he maintains that 1 percent of every portfolio should be occupied by the top crypto, Bitcoin (BTC). He says that this is so because investors need to diversify their portfolios amongst other currencies and tokens.
The Potential for Higher Returns
Every investor puts money in a venture that is likely to give higher returns. The same applies to investments in bitcoin and other digital assets.
However, Bitcoin and crypto, in general, could be a better asset when it comes to returns on investment (ROI).
In his study titled Risks and Returns of Cryptocurrencies, the economist notes that this feature makes crypto an attractive asset.
According to findings in the study, cryptocurrencies are shown to have higher returns when compared to other types of investment assets. It is so despite cryptocurrencies being highly volatile.
However, it’s noteworthy that the study by the professor took into three cryptocurrencies in the shape of bitcoin (BTC), ethereum (ETH) and ripple (XRP). As a result, it’s not a comprehensive reflection of the industry.
Tsyvinski’s study falls in line with that of Professor Dragan Boscovic of Arizona State University. Dragan concluded that “institutional investors are recognizing this new asset as a valued investment opportunity.”
He also said that this is likely to encourage individual investors to consider taking up crypto. In his opinion, this also encourages consumers and retailers to venture into trading of cryptocurrency.