The fifth BTC bull market is unfolding at an astonishing pace, with BTC now nearing the $100,000 mark and looking increasingly unlikely to peak at this level.
Gold holds a key position in institutional portfolios, and this trend may accelerate in the coming years. The efforts of global central banks to reduce dependence on the dollar and achieve diversification of reserve assets may be a long-term endeavor that could last a decade or even longer. Although BTC has outperformed gold in recent years, both assets deserve a place in institutional portfolios, not only due to their uncorrelated returns but also because of their considerable return prospects in the macroeconomic outlook.
Today's Matrixport research will analyze institutional portfolio allocation using quantitative methods while incorporating our views on asset allocation for 2025.
Due to the strengthening dollar, gold experienced a sell-off following the U.S. elections. However, this may present a great buying opportunity for gold investors, as the ongoing gold bull market could parallel the sustained momentum of the BTC bull market. Gold holds a key position in institutional portfolios, and we expect this trend to accelerate in the coming years. The efforts of global central banks to reduce dependence on the dollar and achieve diversification of reserve assets may be a long-term endeavor that could last a decade or even longer.
So far, many have attempted to advocate for including BTC in institutional multi-asset portfolios. These arguments often emphasize BTC's long-term robust performance, high risk-adjusted returns, and its uncorrelation with traditional asset benchmarks like the S&P 500. While BTC's correlation with other assets may temporarily surge, 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 wise judgments about the return assumptions across asset classes and constructing a portfolio optimized for acceptable risk levels. The potential role of BTC in the portfolio depends on forward-looking expectations, not just past performance.
Investors must combine their views on future returns with risk management to optimize their portfolios. The Black-Litterman asset allocation model provides a complex solution. This widely used framework combines the Capital Asset Pricing Model (CAPM) with investors' subjective views to create a robust and realistic portfolio allocation.
This portfolio configuration is designed for large multi-asset portfolio managers such as endowments, pensions, and sovereign wealth funds. Based on a Sharpe ratio of 1.6, the optimized portfolio is expected to yield a return of +15.6%.
The above viewpoints are sourced from Matrix on Target; contact us for the complete Matrix on Target report.
Disclaimer: The market is risky, and investments should be made with caution. This article does not constitute investment advice. Trading digital assets may carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consulting with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.
