A 10% Bitcoin Allocation Investment Portfolio “considerably outperforms” a Typical one
- Portfolio with BTC outperformed the other over one year period, reaching its 2019 high over the summer
- Both portfolios had nearly similar Sortino Ratio
- It also maintained greater risk-adjusted return with a Sharpie of 0.66
- How does having just 10% Bitcoin in your investment portfolio fares in comparison to a typical non-Bitcoin one?
TradeBlock, an institutional digital currency trading tools provider answered that in its recent blog where it found that the portfolio with a 10% Bitcoin allocation along with 55% equities and 35% bonds “considerably outperformed” the one without Bitcoin but included 60% equities and 40% bonds.
The year-over-year performance between the two portfolios started with an investment of $1,000, with the assumption of yearly rebalancing at the previously mentioned percentage allocations.
Portfolio two with BTC outperformed Portfolio one over the one year period and then the former reached its 2019 high over the summer.
Portfolio comparison year-over-year
When it comes to risk, Portfolio 2 with a 10% bitcoin allocation outperformed the alternative portfolio but maintained a modestly higher risk profile because of the flagship cryptocurrency’s heightened volatility.
Both portfolios, however, had nearly similar Sortino Ratio, the risk-adjusted return of an investment asset, at 1.51 and 1.41. Earlier this year, Bitcoin had higher risk-adjusted returns at 1.97 than the 0.25 of S&P 500 and 1.06 of gold.
When it comes out more popular Sharpe Ratio to measure risk-adjusted returns, Portfolio one with BTC maintained greater risk-adjusted return with a Sharpie of 0.66 versus Portfolio 2 which had a Shape of 0.46.
The Best Investment of the Decade
It makes sense the portfolio with Bitcoin outperformed the alternate one as the world’s leading cryptocurrency hasn't been only the best performance crypto asset of 2019 but of the decade.
A recent report by Bank of America Securities shared that if you have invested just $1 in Bitcoin at the start of the decade, it would have been now worth close to a million (more than $90,000).
During the same period, $1 in American stocks would have been up only 250% at $3.46, in gold, it would have been $1.34, 74 cents in crude oil, and $2.08 in 30-year US Treasury while you would have lost your investment by investing $1 in Burmese kyat, now worth $0.004.
Over this past decade S&P 500 and Dow Jones Industrial Average, however, made significant gains of 140% and 130% respectively, but still way less than BTC.
ROI via @CoinMarketCap
Bitcoin – 5,543.52% (2013 till date)
Ethereum – 4,604.90%
XRP – 3,250.33%
Bitcoin Cash (BCH) – -64.62%
Litecoin – 884.16%
EOS – 150.54%@binance Coin (BNB) – > 9000%
BitcoinSV – 1.40%
Tezos – 230.27%
Tron (TRX) – 595.00%
— Wilfred Michael (@CryptoWilfred) December 23, 2019
As trader Josh Rager points out,
“As amazing as these stock returns are, there is a potential opportunity to have similar gains with Bitcoin even at its current price: $7000's.
Potential 1000+% returns, not only over the coming decade, but in the next few years if we see BTC hit between $75k to $100k+.”
Live Bitcoin (BTC) Price:
1 BTC/USD =$48,565.4119 change ~ -2.62%