Fidelity Says Most Investors Should Consider Having Up To 5% Of Portfolios In Bitcoin

Updated: 05 June 2024

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Most investors should add a small portion of Bitcoin to their portfolios regardless of their opinion of the digital asset, Fidelity Investments said.

Many traditional investors are staying away from BTC because of analysis paralysis, said Matt Horne, the head of digital asset strategies at Fidelity Investments, in a June 4 interview with CNBC.

“It’s tough because a lot of professional investors are able to model out every asset class given the amount of data that’s at our fingertips now,” he said. “With digital assets, you don’t have the luxury.”

Investors should focus on BTC’s underlying technology to understand why they “might want to own” some of the crypto and position themselves accordingly, he added.

A small portfolio allocation to Bitcoin is likely appropriate for them, he said.

“A non-zero position in something like bitcoin could make sense for a lot of clients given a long-term horizon [and] position sizing that’s appropriate for their risk,” he said. “Most investors are saving money, investing money with an advisor, to meet some longer-term goal [such as] retirement.”

Fidelity Analysts Says A Bitcoin Allocation Of 1-5% Is Enough

A small allocation in portfolios of between 1% to 5% should be small enough to reduce risk if the leading cryptocurrency were to drop to zero, he said. However, this allocation is also big enough to benefit from any upside move by BTC, and also adequate to act as an inflation hedge, he added.

Funds Continue To Flow Into BTC ETFs

Institutions have started to look at ways to incorporate Bitcoin into their investment portfolios. This is after spot Bitcoin ETFs (exchange-traded funds) received approval and subsequently launched in January this year.

📊 Digital asset investment products saw inflows of US$185m for the 4th consecutive weeks. May saw inflows of US$2bn. Most of the inflows went into #Bitcoin with US$148m.

Get more insights in our full report: https://t.co/Hv8LThOVh4 pic.twitter.com/WMK0JJasuz

— CoinShares (@CoinSharesCo) June 3, 2024

BTC funds and these new ETFs recorded $148 million in inflows during the last week of May, according to a report by Coinshares. Meanwhile, capital continued to leave short-Bitcoin funds with outflows totalling $3.5 million during the same period.

Overall, digital asset funds recorded $2 billion in inflows in May. This pushed the year-to-date inflows past $15 billion for the first time ever, the report added. The majority of the inflows came from the US, while Switzerland and Canada took second and third place, respectively.