Early-Days Bitcoin Leader Wences Casares: It Is Irresponsible Not To Have BTC in Financial Portfolio
Wences Casares, the CEO of Xapo, believes that it would be irresponsible for investors not to have a small percentage of their portfolio allocated in Bitcoin (BTC). In the future, a balanced portfolio with a small exposure in Bitcoin could have a big impact on the overall performance of the investment strategy.
1% Of The Portfolio Should Be Invested in Bitcoin
In a recent essay, Mr. Casares said that Bitcoin should take one percent of every single investment portfolio. He said that if there is a portfolio with $10 million, 1% should be allocated to Bitcoin. This is very important because it has a very low risk compared to the high returns that it could provide.
Investing $100,000 in Bitcoin (1% of a $10 million portfolio) would allow investors to have a return of $25 million in just a few years. If Bitcoin drops to zero, the funds lost would not change the overall performance of the portfolio. However, if Bitcoin succeeds, it could have a large impact on the funds they were managing.
On the matter, he commented:
“Bitcoin offers a unique opportunity for a non-material exposure to produce a material outcome. It would be irresponsible to have an exposure to Bitcoin that one cannot afford to lose because the risk of losing the principal is very real. But it would be almost as irresponsible to not have any exposure at all.”
— Wences Casares (@wences) July 20, 2017
Bill Miller, a recognized investor in the market, decided to place 1 percent of its portfolio in Bitcoin. He did that back in July 2017. However, a few months later, his portfolio had a 50% allocation in Bitcoin due to its price increase during a short period of time.
Nonetheless, Bitcoin entered a bear market in January 2018 that last for over a year and in which Bitcoin lost more than 80% of its value. Other digital assets fell more than 90% during the same period of time.
Xapo is currently storing Bitcoin in Swiss bunkers and is very bullish about the future of the digital currency. Casares believes that Bitcoin is an asset that resembles the early internet in different ways. Now, Bitcoin works as a new protocol in which companies start to develop their own solutions and products and spread them into the market rather than modifying the protocol behind Bitcoin.
Nonetheless, Casares believes that Bitcoin is an intellectual experiment and that it can ultimately fail. This is why he recommends placing just 1% of a portfolio in Bitcoin. If it falls down to zero, the impact would be minor in such a portfolio.
At the moment, Wences Casares says that there are over 60 million people that own Bitcoin and there will be 1 million people every month in the future. Moreover, there are 1,000 cryptocurrencies that have less than 5 million owners combined. That means that Bitcoin will be adding more users in just five months, than the other 1,000 cryptos in their combined history.
At the time of writing this article, Bitcoin has a market capitalization of $91.5 billion and a price per coin of $5,185 according to data provided by CoinMarketCap.