Study by Yale economist says all portfolios should hold Bitcoin

posted 10 months ago
According to Professor Aleh Tsyvinski, Bitcoin should be an integral part of a portfolio, regardless of whether someone is enthusiastic about the cryptocurrency or not. For the optimal construction of one’s portfolio, the economist says Bitcoin should account for at least 6%. Those who are less enthusiastic about the world’s most popular cryptocurrency, should hold 4%. Regardless of someone's position on the matter, Bitcoin should comprise a minimum of 1% of a portfolio, for diversification purposes.

The study titled, Risks and Returns of Cryptocurrencies, also outlines a uniquely positive feature of cryptocurrencies when compared to traditional stocks and bonds. Using Sharpe’s ratio, Tsyvinski demonstrated that digital currencies show higher potential for return, despite their increased volatility. Also, the study concluded that momentum and investor attention are key drivers of price.
Tags: bitcoin, news, opinion