According to Golden Finance, K33 Research reports that the approval of a Bitcoin spot ETF in the United States will simplify access to Bitcoin exposure and help reduce traditional 60/40 portfolio risks through digital asset diversification. We expect diversification and risk-adjusted outperformance to become key entry strategies for various ETF providers, said senior analyst Vetle Lunde and vice president Anders Helseth.
Analysts believe that Bitcoin has proven its worth as a powerful tool for portfolio diversification since 2020. An investor with 1% Bitcoin exposure in a traditional 60/40 portfolio would outperform a portfolio with no Bitcoin exposure by 3.16%. A traditional 60/40 portfolio is a classic investment strategy in which 60% is allocated to stocks and 40% to bonds.
The analysts added that while the Bitcoin diversification narrative has weakened during 2022’s cryptocurrency market turmoil, Bitcoin exposure this year will improve risk-adjusted returns for traditional portfolios due to weakened correlation and strong upside.
