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Author: Admin | 2025-04-28
ADVISOR PLAYBOOK: PORTFOLIO IMPLEMENTATION AND PRACTICEBitcoin has become too big to ignore as ETFs expand access and digital assets gain prominence as an emerging asset. When you consider adding bitcoin to a client’s portfolio, it is important to understand how bitcoin functions alongside “traditional” asset classes to consider if and how much exposure a portfolio should have.Bitcoin has outperformed other major asset classes in 7 of the last 10 calendar years (Figure 2). This massive price movement has equated to significant volatility and drawdowns. Along with historically strong returns and high volatility, bitcoin has come with the benefit of low (0.2) long-term correlation to U.S. stocks.6Figure 2: Bitcoin performance vs. other major asset classes (2013-2023 YTD)Past performance does not guarantee future results. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Certain sectors and markets perform exceptionally well based on current market conditions and iShares and BlackRock Funds can benefit from that performance. Achieving such exceptional returns involves the risk of volatility and investors should not expect that such results will be repeated. Index performance does not represent actual Fund performance. For actual fund performance, please visit www.iShares.com or www.blackrock.com. Source: Bloomberg, BlackRock calculations, as of Dec. 31, 2023. Asset classes shown include major liquid asset classes available to U.S. investors. Bitcoin returns calculated using Bloomberg Bitcoin Spot Price. SPX is represented by the S&P 500 Total Return Index (USD). EM is represented by the Dow Jones Emerging Markets Total Return Index (USD). AGG is represented by S&P U.S. Aggregate Bond Index. HY is represented by S&P U.S. High Yield Corporate Bond Index. Gold is the 1oz spot price of gold from Bloomberg. CMT is represented by Dow Jones Commodity Index.Bitcoin's volatility remains elevated but has decreased as the value of bitcoin has risen, now sitting at around 50% (Figure 3). To put bitcoin’s volatility in context, various popular individual stocks experienced similar volatility levels around 50% over the same time period. Those with similar volatility levels included tech giants like Tesla (TSLA), Nvidia (NVDA), Meta (META), and Advanced Micro Devices (AMD), as well as non-tech stocks such as Crispr Therapeutics (CRSP), Range Resources (RRC), and Norwegian Cruise Lines (NCLH).7 Figure 3: Bitcoin volatility has declined as its value has increased, but remains elevatedPast performance does not guarantee future results. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Start date reflects inception of CME bitcoin futures in the U.S. † Source: Bloomberg Bitcoin Spot Price, as of
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