According to an executive at Fidelity Digital Assets, some investors could be trying too hard to understand bitcoin and missing out on an investment opportunity in the process. Matt Horne, head of digital asset strategy in the firm's custody and trading division for institutional investors, said investors and advisors are busy fine-tuning their thesis on cryptocurrencies when a small portfolio allocation is likely appropriate for them, regardless. of his thesis. โYou could have multiple investment theses in bitcoin, and that's fine,โ Horne said Monday at the 2024 Vision conference, a cryptocurrency investment conference for advisors hosted by the Council of Digital Asset Financial Professionals in Austin, Texas. "Most investors save money, invest it with an advisor to achieve some longer-term goal. [such as] retirement," Horne added. "A non-zero position in something like bitcoin could make sense for many clients given a long-term horizon [and] Bitcoin ETFs hit the US market almost six months ago. Advisors who needed regulated funds like Bitcoin ETFs to direct their wealthy clients to invest in Bitcoin represented a big argument in favor of the funds. Until now, however, many have avoided intervening for various reasons, ranging from high volatility to mistrust and lack of understanding of the asset class, regulation and lack of track record. "We spend a lot of time discussing disruptive technology. [thesis] or venture investing or digital gold, and I think yes to all of that is fine," he added. "What your thesis is will probably dictate the size of the position and perhaps where to get it from in a portfolio." BTC.CM= YTD mountain Bitcoin (BTC) so far this year Investors and wealth managers comfortable with bitcoin typically recommend a small allocation between 1% and 5% to add risk to a portfolio without subjecting it to too much cryptocurrency volatility. "yes that's how it is. "If (worst case) goes to zero, the impact on the broader portfolio is minimal due to the size of that condition," Horne said. "If it does what many of us hope, win over time, then you have to make sure that customers have some of that exposure there." The Fidelity executive acknowledged that Bitcoin's short lifespan (it's about 15 years old, and even then only the years after 2015 are probably worth tracking) makes it virtually "impossible" to model it. But that's fine too, he said. The key is for advisors and investors to seek education in this new field of investing. "It is difficult because many professional investors are able to model each [other] asset class given the amount of data that is at our fingertips now," he said. "With digital assets, you don't have that luxury... and I think that's okay," he added. "That's why you just have to understand why you might want to own this, understand the potential of this technology and then position yourself accordingly.โ
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A small bitcoin allocation makes sense regardless of your thesis on the cryptocurrency, says Fidelity