Key Points
- Matt Horne of Fidelity Investments encourages investors to allocate a small portion of their portfolios to Bitcoin (BTC).
- Institutional interest in Bitcoin and other digital assets has significantly increased since the introduction of Bitcoin exchange-traded funds.
Matt Horne, the digital asset strategies leader at Fidelity Investments, advises investors to consider adding Bitcoin to their portfolios. This advice holds irrespective of their investment stance on the decentralized currency.
Overcoming Analysis Paralysis
Horne pointed out on June 4 that many traditional investors and asset managers are hesitant to invest in Bitcoin and the digital asset market. This is due to the lack of data available for these new asset classes. He believes it is crucial for investors to understand why they might want to own Bitcoin and to comprehend the potential of blockchain technology.
Horne suggested that a small allocation, typically between 1-5%, would be sufficient to reduce risk if Bitcoin’s value falls to zero. However, it would still be substantial enough to benefit from any potential gains from the digital currency and act as an inflationary hedge.
Increasing Institutional Interest
Horne’s remarks reflect the growing interest in Bitcoin and cryptocurrencies from institutional investors and fund managers. These were technologies that many large financial institutions initially ignored or dismissed. This interest surged after the launch of spot Bitcoin exchange-traded funds in the United States in January 2024. This event propelled Bitcoin to over $70,000 per coin.
According to the latest “Digital Asset Fund Flows” report, Bitcoin funds saw $148 million in inflows in the last week of May. The total inflows for Bitcoin funds for the entire month of May were almost $2 billion. Since the beginning of 2024, Bitcoin funds and exchange-traded products have recorded over $14 billion in inflows. In contrast, short Bitcoin funds experienced $12.3 million in capital outflows for May. This suggests that market sentiment among ETF and ETP investors remains positive for Bitcoin.
The report further noted that Bitcoin investment funds account for over $74 billion in assets under management globally.
