CIO of Bitwise: Don't add Bitcoin individually, restructure the entire portfolio

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Matt Hougan, Chief Investment Officer of Bitwise, urges traditional investors to change their approach when incorporating Bitcoin into their portfolios — instead of adding it individually, they should consider it within the overall "risk budget" of the portfolio.

Although Bitcoin is notorious for being 3–4 times more volatile than the S&P 500, Hougan said shrewd allocation can increase returns with minimal risk. For example, if you allocate 5% to BTC (giảm stocks to 57% and bonds to 38%) from 2017 to 2024, the total return increases from 107% to 207%, while the standard deviation only inches slightly from 11.3% to 12.5%.

Hougan also came up with a more optimal strategy: increase the proportion of bonds and choose short-term T-bills to offset risks from BTC. With a portfolio structure of 40% stocks, 50% bonds, and 10% Bitcoin, historical data shows even higher returns and lower risks.

He concluded: "When adding Bitcoin to your portfolio, don't add it in isolation. Think in terms of the overall risk picture. The results may surprise you."

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