Fidelity Investments suggests that even a small allocation to Bitcoin (BTC) could benefit investors, regardless of their views on the digital asset, CNBC reported.

Matt Horne, Fidelity’s head of digital asset strategies, made this assertion on June 5 at the 2024 Vision conference.

Horne emphasized that investors and advisors are developing their crypto investment strategies, but a modest Bitcoin allocation can be wise for many portfolios.

Ongoing caution

Horne explained that many investment managers and advisors are still formulating their Bitcoin and digital asset investment theses and have not yet invested. He argued that Bitcoin's track record shows that even a small exposure can significantly benefit long-term portfolios.

According to Horne:

“Most investors save and invest with an advisor to achieve long-term goals like retirement. A small Bitcoin allocation could make sense for many clients with a long-term outlook and appropriate risk sizing.”

Spot Bitcoin ETFs were introduced in the US market nearly six months ago and were expected to be popular among advisors favoring regulated investment vehicles for their high-net-worth clients.

However, many advisors remain cautious due to high volatility, a lack of understanding, regulatory uncertainties, and a limited track record.

Horne addressed these concerns, stating:

“We spend much time debating disruptive technology, venture investing, or digital gold. All these theses are valid. Your thesis will dictate position sizing and portfolio sourcing.”

Financial advisors generally recommend a small Bitcoin allocation of 1% to 5% to introduce some risk without overwhelming the portfolio with crypto’s volatility.

Horne noted that a small exposure to Bitcoin would not significantly impact the broader portfolio if prices fall dramatically, but any appreciation in value would greatly benefit based on its historical performance.

Brief history

Bitcoin was introduced in 2009 by an anonymous figure known as Satoshi Nakamoto. Initially overlooked by mainstream investors, it began gaining attention from the broader financial community around 2015.

Since then, Bitcoin has experienced extreme volatility, massive price surges, and significant declines, making it a challenging asset to model and predict.

Despite Bitcoin’s relatively brief history of about 15 years, with meaningful data only available since 2015, Horne stressed the importance of investors educating themselves about the asset due to its impact on the financial landscape.

“You need to understand why you might want to own this, the potential of the technology, and then position accordingly,” Horne said.

He also cautioned that investors must approach digital assets with a unique perspective, as Bitcoin’s unpredictable nature and short history make it difficult to model with traditional financial tools.