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In its annual Big Ideas report for 2024, Cathie Wood’s ARK Invest highlights Bitcoin (BTC) as an essential diversifier for investment portfolios, advocating for an allocation just under 20%. Over the past seven years, Bitcoin has outperformed major asset classes with an annualized return that suggests a 19.4% portfolio allocation in 2023 would maximize risk-adjusted returns. This allocation has significantly increased from 0.5% in 2015 and 6.2% in 2022, underscoring Bitcoin’s growing importance in the investment landscape.
ARK Invest emphasizes Bitcoin’s role not just as an investment option but as a crucial component for diversification, offering unique growth potential among digital assets. With a low five-year correlation to traditional assets, Bitcoin presents notable diversification benefits. Minimal allocations by institutional investors could significantly impact its price, considering the vast $250 trillion global investable asset base.
The report also references Bitcoin’s 77.8% increase over the last year and attributes its recent success to heightened institutional demand.
