Cathie Wood’s ARK Invest Says An Optimal Investment Portfolio Should Hold About 20% Of Bitcoin

Updated: 01 February 2024

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Cathie Wood’s ARK Invest said an optimal investment portfolio should have held 19.4% of Bitcoin last year and that such an allocation maximizes ”a portfolio’s risk-adjusted returns.”

Bitcoin is a vital component for diversifying investment portfolios, ARK said in its annual Big Ideas report for 2024, pointing to its low five-year correlation of just 0.27 with traditional asset classes. Investing in Bitcoin is a counterbalance to traditional asset classes, it said.

“Bitcoin is not just a new investment option but a vital component for diversifying investment portfolios, offering unprecedented growth potential among digital assets,” it added. “Over the last seven years, Bitcoin has registered an annualized return far surpassing that of major asset classes.”

ARK Invest Advocates A Long-Term Investment Strategy For BTC

Bitcoin’s short-term volatility can “obfuscate” the asset’s long-term returns, it said. Investors should focus not on when to buy BTC but rather decide on how long they should maintain their exposure to the leading cryptocurrency.

Investors who held Bitcoin for at least 5 years “have profited, no matter when they made their purchases,” it said.

Given the large $250 trillion global investable asset base, a shift in the way institutional investors allocate their portfolios could have a big impact on BTC’s price, ARK said.

If that investor base allocated 4.8% of assets to Bitcoin, ARK estimates the BTC price could surge to $550k, and if the optimal 19.4% was allocated the price could rocket to $2.3m. An allocation of just 1% would push the price to $120,000 from $42,998 at 12:48 p.m. EST, it said.

An optimal allocation into bitcoin could have a >$2 million impact on bitcoin's price. pic.twitter.com/vIFH0fCmZQ

— Yassine Elmandjra (@yassineARK) January 31, 2024