Fidelity says most investors should consider holding up to 5% of portfolios in Bitcoin

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Most investors should add a small portion of bitcoin to their portfolios regardless of their opinion on the digital asset, Fidelity Investments said.

Many traditional investors are staying away from btc due to analysis paralysis, said Matt Horne, head of digital asset strategies at Fidelity Investments, in a June 4 report. bitcoin-stake-makes-sense-regardless-of-cryptocurrency-thesis-says-fidelity.html”>interview with CNBC.

“It's difficult because many professional investors are able to model each asset class given the amount of data we now have at our disposal,” he said. “With digital assets, you don't have that luxury.”

Investors should focus on the underlying technology of btc to understand why they “might want to own” some of the cryptocurrencies and position themselves accordingly, he added.

A small portfolio allocation to bitcoin is probably appropriate for them, he said.

“A non-zero position in something like bitcoin could make sense for many clients given a long-term horizon (and) a position size appropriate to their risk,” he said. “Most investors save money, invest it with an advisor to achieve some longer-term goal (like) retirement.”

Fidelity Analysts Say 1-5% bitcoin Allocation Is Enough

A small portfolio allocation of between 1% and 5% should be small enough to reduce risk if the leading cryptocurrency were to fall to zero, he said. However, this allocation is also large enough to benefit from any bullish movement in btc, and also suitable to act as a hedge against inflation, she added.

Funds continue to flow into btc ETFs

Institutions have begun looking for ways to incorporate bitcoin into their investment portfolios. This is after the bitcoin spot ETFs (exchange-traded funds) received approval and were subsequently launched in January this year.

Digital asset investment products recorded inflows of $185 million for the fourth consecutive week. Inflows of $2 billion were recorded in May. Most of the entries went to twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin with 148 million dollars.

Learn more in our full report: https://t.co/Hv8LThOVh4 pic.twitter.com/WMK0JJasuz

—CoinShares (@CoinSharesCo) twitter.com/CoinSharesCo/status/1797606504742134059?ref_src=twsrc%5Etfw”>June 3, 2024

btc funds and these new ETFs saw $148 million in inflows during the last week of May, according to a report from Coinshares. Meanwhile, capital continued to flow out of short bitcoin funds with outflows totaling $3.5 million over the same period.

Overall, digital asset funds saw inflows of $2 billion in May. This pushed year-to-date inflows to surpass $15 billion for the first time in history, the report added. The majority of entries came from the United States, while Switzerland and Canada took second and third place, respectively.

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