The fifth BTC bull market is unfolding at an astonishing speed, with BTC now approaching the $100,000 mark, and it increasingly seems unlikely to peak at this level.
Gold occupies a key position in institutional portfolios, a trend which may accelerate in the coming years. Moreover, the efforts of global central banks to reduce dependency on the dollar and achieve diversification of reserve assets may be a long-term endeavor, lasting 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 substantial return prospects under macroeconomic conditions.
Today's Matrixport investment research will employ a quantitative approach to analyze institutional portfolio allocation while incorporating our views on asset allocation for 2025.
Due to the strengthening dollar, gold experienced a sell-off following the conclusion of the U.S. elections. However, this may present an excellent buying opportunity for gold investors, as the ongoing gold bull market may progress alongside the sustained trend of the BTC bull market. Gold occupies a key position in institutional portfolios, a trend we expect to accelerate in the coming years. The efforts of global central banks to reduce dependency on the dollar and achieve diversification of reserve assets may be a long-term endeavor, lasting a decade or even longer.
To date, many have attempted to advocate for the inclusion of BTC in institutional multi-asset portfolios. These arguments often 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. Although the correlation of BTC with other assets may temporarily spike, it remains unpredictable and inconsistent.
Frequent rebalancing may further enhance returns, but the true value lies not in fine-tuning the rebalancing frequency, but in making wise judgments about the return assumptions of various asset classes and building a portfolio optimized for an acceptable level of risk. The potential role of BTC in a portfolio depends on forward-looking expectations, not merely past performance.
Investors need to optimize their portfolios while managing risk, taking into account their views on future returns. 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 configuration is designed for large multi-asset portfolio managers, such as endowment funds, pensions, and sovereign wealth funds. Based on a Sharpe ratio of 1.6, portfolio optimization is expected to yield a portfolio return of +15.6%.
The above opinions are derived from Matrix on Target; contact us for the complete report on Matrix on Target.
Disclaimer: Markets carry risks, and investments should be made cautiously. 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 herein.
