The fifth BTC bull market is unfolding at an astonishing pace, and BTC is now approaching the $100,000 mark, looking increasingly unlikely to peak at this level.
Gold occupies a key position in institutional portfolios, and this trend may 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 that will last a decade or even longer. Although BTC has outperformed gold in recent years, both assets deserve a place in institutional portfolios, not only because of their uncorrelated returns but also due to their considerable return prospects under the macroeconomic outlook.
Today's Matrixport investment research will adopt a quantitative approach to analyze institutional portfolio allocation, while incorporating our views on asset allocation for 2025.
Due to the strengthening of the dollar, gold experienced a sell-off after the U.S. elections. However, this may be an excellent buying opportunity for gold investors, as the ongoing gold bull market could progress alongside the sustained trend of the BTC bull market. Gold occupies 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 reliance on the dollar and achieve diversification of reserve assets may be a long-term endeavor that will 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 lack of correlation with traditional asset benchmarks like the S&P 500. 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 the 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 the investor's subjective views to create a robust and realistic portfolio allocation.
This portfolio allocation is designed for large multi-asset portfolio managers, such as endowments, pension funds, 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 views above are based on Matrix on Target, contact us for the complete Matrix on Target report.
Disclaimer: Markets involve risk; investment should be approached with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of individual circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided here.
