Investment management company VanEck: institutions should invest in bitcoin, small allocations will significantly increase ROI

According to a report by Cointelegraph on February 10, a recent report by investment management company VanEck suggested that institutional investors should use a small portion of their funds to allocate Bitcoin. The report shows that "Bitcoin may increase the risk and return of institutional portfolios."

bitcoin-crypto-currency-currency-money (Image source: pxhuel )

The researchers also stated that for a portfolio of 60% equity and 40% bonds, a small allocation of Bitcoin significantly increased the cumulative rate of return with minimal impact on its volatility.


Comparison of returns for five portfolios of Bitcoin. Source: VanEck

Barriers to Institutional Adoption of Bitcoin

Of all the portfolios considered by VanEck, the return on holding a 3% Bitcoin portfolio is the highest. Nonetheless, the report explained that bitcoin is a bearer asset and that the market lacks the infrastructure to connect bitcoin to the capital market. These are obstacles for institutions to adopt bitcoin.

VanEck also said that given the scarcity, currency value and ease of use of Bitcoin, it has the potential to become digital gold. Researchers acknowledge that Bitcoin is not a currency, but still has the potential to become a currency:

Bitcoin is not exactly a currency, but it may become a currency in the future.

This report also makes an in-depth comparison of the characteristics of the US dollar, gold and bitcoin, and the results show that after comparing the properties of currency assets, bitcoin has an advantage over gold.


Compare the monetary properties of gold, dollar and bitcoin. Source: VanEck

Many proponents of the cryptocurrency community have high expectations for Bitcoin as an investment asset. Cointelegraph reported a few days ago that the founder and partner of cryptocurrency venture capital fund Morgan Creek Digital stated that Bitcoin's recent US $ 10,000 is just the first step towards reaching $ 100,000 in 2021.