According to Blockworks, financial advisers are contemplating a greater allocation to bitcoin due to an evolving macroeconomic environment and an expected shock to the asset's supply and demand. Bitwise research analyst Ryan Rasmussen reported that advisers interested in crypto have generally considered an allocation between 1% and 5% of a portfolio. However, professional asset allocators are now looking to hedge against risks of rising inflation, economic uncertainty, and geopolitical conflict, viewing bitcoin as a 'chaos-resilient' asset.
Rasmussen revealed that two-thirds of the asset allocators he spoke with, including independent financial professionals and those part of large networks and registered investment advisers (RIAs), are considering increasing their current allocations to 5% or more. Some are also thinking about entering the market for the first time. Bitcoin's price was around $34,000 at the time of the report, up about 15% from seven days prior.
A January survey by VettaFi and Bitwise found that while 90% of various asset allocators receive crypto-related questions from clients, only 15% allocate client assets to the space. Approximately a third of respondents said the launch of a spot bitcoin ETF would make them more comfortable allocating to crypto. Advisers are beginning to understand the potential impact of proposed spot bitcoin ETFs and the upcoming decrease of per-block rewards for bitcoin miners on the asset's price, according to Rasmussen.
An August Bitwise report stated that a 2.5% allocation to bitcoin would have boosted the three-year risk-adjusted return of a portfolio allocating 60% to stocks and 40% to bonds by 12 percentage points. Rasmussen added that a 5% allocation can have a minimal impact on portfolio volatility and a significant impact on risk-adjusted returns, while not causing significant harm if crypto underperforms.
