Important points
BlackRock data shows that a Bitcoin allocation in a portfolio can significantly outperform traditional investments. BlackRock emphasizes Bitcoin’s role as a hedge against fiat currency declines.
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At the Digital Assets Conference held today, BlackRock presented its latest insights into Bitcoin’s volatility and future performance, stating that Bitcoin’s volatility has decreased significantly and will continue to decrease over time. .
Breaking news: Bitcoin volatility has fallen and will continue to fall – BlackRock pic.twitter.com/iCWafcyLyD
— Marty (@ Thinkingvols) October 3, 2024
BlackRock, the world’s largest asset manager, highlighted Bitcoin’s evolving role in the global financial ecosystem. According to BlackRock, Bitcoin volatility has been steadily decreasing, and the company expects this trend to continue as adoption grows and the asset matures.
BlackRock data showed that adding Bitcoin to a portfolio improves risk-adjusted returns over multiple time periods. Portfolios with 1%, 3%, or 5% Bitcoin allocations saw higher returns over 1-, 2-, 5-, and 10-year periods compared to traditional portfolios.
How Bitcoin Impacts Your Portfolio (BlackRock-Digital Assets Conference)
Although Bitcoin slightly increased the volatility of these hypothetical portfolios, the potential for higher returns often outweighed the additional risk. For example, a portfolio with a 5% Bitcoin allocation achieved a 19.1% return over the long term, significantly exceeding the 11% return from a traditional portfolio with no Bitcoin exposure.
BlackRock’s analysis also emphasized the importance of long-term holding when it comes to Bitcoin volatility. According to the company, Bitcoin’s lowest four-year trailing return remains an impressive 137%, and holding the asset for three years or more consistently yields positive returns.
Longer holding periods reduce Bitcoin’s short-term volatility (BlackRock-Digital Assets Conference)
Additionally, BlackRock compares Bitcoin to gold and U.S. Treasuries, highlighting Bitcoin’s fixed supply, decentralized governance, and low correlation to traditional assets, making Bitcoin more reliable than governments and fiat currencies. It is positioned as a hedge against a decline.
Additionally, BlackRock noted that while Bitcoin’s volatility remains high, it is decreasing as the asset matures. The analysis showed Bitcoin’s low correlation with gold (0.1) and the S&P 500 (0.2), highlighting its role as an independent asset class.
Finally, BlackRock highlighted Bitcoin as a hedge against a decline in the value of fiat currencies, particularly the US dollar. He highlighted the dollar’s weakest decline since 1913 and cast Bitcoin as a safeguard against inflation. By offering a Bitcoin ETF, BlackRock is demonstrating its belief in Bitcoin’s long-term value and growing role in financial markets.
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