Bitcoin has been winning hearts and minds throughout 2020 in the midst of unprecedented bank currency printing and coronavirus-induced digitization in daily life.
The price of bitcoin has soared since a crash to around $ 4,000 per bitcoin in March, climbing to its all-time high in 2017 of about $ 20,000 – though it failed to cross the psychological barrier.
Now, a top market strategist in the research arm of New York’s global investment manager, AllianceBernstein, which has $ 631 billion in assets under management, has admitted it has “changed [his] think ”about bitcoin.
The bitcoin price has more than doubled since January, convincing many investors that bitcoin … [+]
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“I’ve changed my mind about bitcoin’s role in asset allocation,” Fraser-Jenkins, co-head of Bernstein Research’s portfolio strategy team, wrote in a note to clients this week first reported by bitcoin and cryptocurrency news outlet Coindesk.
Fraser-Jenkins, following in the footsteps of a host of legendary investors who have named bitcoin as a potential hedge against inflation this year, now recommends that investors can add a small amount of bitcoin to their portfolios when bitcoin’s average monthly earnings are above 3 %. , with “bitcoin driver … similar to the one as for gold.”
“The resulting allocation to bitcoin is low, but then within this simple optimization framework the allocation to some other asset classes is zero, so in that context it seems that bitcoin may be empirically significant, ”Fraser-Jenkins wrote.
Bitcoin’s relationship with other major assets has increased this year but also warned that bitcoin is a liquid asset and can be sold off quickly, leading to wild swings in the price of bitcoin – and bitcoin may not “move just in a way and which would counteract inflation. in a certain fiat currency. “
“From a narrow empirical point of view, the downward shift inward [the volatility] of bitcoin makes it more desirable but its growing correlation points the other way, “Fraser-Jenkins added, pointing to a fall in bitcoin’s volatility over the past three years as well as a decline in bitcoin’s relative volatility to gold and gold. stocks.
The bitcoin price has added about 170% over the past 12 months, with investors betting increasingly … [+]
Coinbase
However, while Fraser-Jenkins noted that “the larger role that governments are likely to play in economies makes cryptos potentially more appealing,” this could also “deter crypto.”
“If they interfere with policy implementation, then governments may seek to limit them,” wrote Fraser-Jenkins, echoing warnings others have raised about possible government crackdowns on bitcoin and cryptocurrencies.
Last month, billionaire founder and co-chairman of the world’s largest hedge fund, Ray Dalio, warned Bridgewater Associates that governments will “ban” bitcoin if it continues to grow and begins to become “material.”
“The attractions of cryptos are what also make policy makers annoyed,” according to Fraser-Jenkins. “Cryptos have a place in asset allocation … as long as they are legal!”