Bitcoin and Digital Assets Allocation for Advisors: How to Size Client Portfolios (21Shares)
Summary
- Bitcoin's rolling three-month volatility averaged around 38% after US spot ETFs launched in January 2024, compared to close to 60% before 2024.p.6
- Bitcoin, Ethereum, and Solana account for approximately 81% of the total digital asset market cap, excluding stablecoins.p.10
- In a back-tested 60/40 model, a conservative 2% Bitcoin allocation with quarterly rebalancing increased annualized returns from 10.86% to 11.64%.p.13
- Without rebalancing, the maximum drawdown of the growth-oriented portfolio expanded from -14.82% to -17.83%.p.13
Key insights
- Bitcoin acts primarily as a macro diversifier and digital store of value within the alternatives sleeve.p.3
- Ethereum and Solana serve as programmable infrastructure assets fitting into a tech equities sleeve.p.9
- Systematic rebalancing maintains client target risk levels over full market cycles, reducing maximum drawdowns substantially.p.13
Topics and entities
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