Investment management company VanEck: Bitcoin is a great tool for diversifying your portfolio

Investment management company VanEck recently concluded in a blog post that Bitcoin is an excellent tool for diversifying portfolios.

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Cryptographic currency shows low correlation with traditional assets

It is no secret that bitcoin has barely shown an association with traditional assets. Previously, several well-known asset management companies and hedge funds, including Pantera Capital, have conducted detailed analysis in this regard. As a result, VanEck focuses on the distinctive characteristics of cryptocurrencies, which makes it surprising that it moves independently of other asset groups.

This feature makes BTC a must for any diversified portfolio. VanEck concluded that:

“Bitcoin is less relevant to traditional asset classes (including broad market stock indices, bonds and gold) and may therefore increase the diversity of portfolios.”

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Interestingly, VanEck mentions another aspect of Bitcoin that has become a hot topic: the stock-to-flow ratio. The investment management company used the research model proposed by Twitter user PlanB, which was analyzed in detail based on the detailed analysis of cryptocurrency-based stock-to-flow, which is mainly aimed at the scarcity of coins.

Earlier this month, Bayern Bank of Germany released a report on the PlanB model.

Bitcoin's impact on the portfolio

VanEck believes that even a small allocation of bitcoin may increase the potential return on the institutional portfolio. The investment manager provides a chart showing the different allocations to Bitcoin and analyzing the potential impact.

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For example, if an institutional investor created a 60% stake and a 40% bond portfolio back in 2012, it would generate nearly 100% return. However, if the same portfolio is only allocated 3% of the funds to BTC, leaving 58.5% and 38.5% of the shares and bonds, respectively, the final income will increase to nearly 200%.

Gabor Gurbacs, VanEck's digital asset strategist, shared more bitcoin as an ideal asset through his Twitter, saying:

"The combination of bitcoin's persistence, scarcity, privacy and the nature of its bearer assets as a minimum of trust helps them hold monetary value. Bitcoin has the potential to become digital gold."

According to previous reports, VanEck and SolidX Management are about to start offering a limited bitcoin exchange-traded fund (ETF) stock.