The fifth BTC bull run is unfolding at an alarming pace, with BTC now approaching the $100,000 mark and looking increasingly unlikely to top out at this level.
Gold occupies a key position in institutional portfolios, a trend that may accelerate in the coming years. The global central bank's efforts to diversify its reserve assets away from the dollar may be a long-term task that will last for a decade or more. Although BTC has outperformed gold in recent years, both assets deserve a place in institutional portfolios, not only because of their non-correlated returns, but also because of their promising return prospects under the macroeconomic outlook.
Today's Matrixport research will use quantitative methods to analyze institutional portfolio allocation, while incorporating our views on asset allocation for 2025.
Due to the strengthening dollar, gold experienced a sell-off after the US elections. However, this may present an excellent buying opportunity for gold investors, as the ongoing gold bull market could run parallel to the continuing trend of the BTC bull market. Gold occupies a critical position in institutional portfolios, a trend we expect to accelerate in the coming years. The efforts of global central banks to reduce reliance on the dollar and achieve diversification of reserve assets may be a long-term endeavor, lasting a decade or even longer.
So far, many have attempted to advocate for the inclusion of BTC in institutional multi-asset portfolios. These arguments typically emphasize BTC's long-term robust performance, high risk-adjusted returns, and its uncorrelated nature with traditional asset benchmarks such as the S&P 500 index. While the correlation of BTC with other assets may temporarily spike, it remains unpredictable and inconsistent.
Frequent rebalancing may further enhance returns, but the real value lies not in fine-tuning the rebalancing frequency, but in making informed judgments about return assumptions for each asset class and constructing a portfolio optimized for acceptable risk levels. The potential role of BTC in a portfolio depends on forward-looking expectations, not just past performance.
Investors need to combine their views on future returns with risk management to optimize their portfolios. The Black-Litterman asset allocation model provides a sophisticated solution. This widely used framework combines the Capital Asset Pricing Model (CAPM) with investors' subjective views to create robust and realistic portfolio allocations.
This portfolio allocation is designed for large multi-asset portfolio managers, such as endowment funds, pension funds, and sovereign wealth funds. Based on a Sharpe ratio of 1.6, the expected portfolio return is +15.6%.
The above opinions are sourced from Matrix on Target. Contact us to obtain the complete report of Matrix on Target.
Disclaimer: Markets are risky, and investments should be made with caution. This article does not constitute investment advice. Trading in digital assets may carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided herein.
