Bitcoin is gaining more attention due to its ability to improve investment efficiency and reduce portfolio risk. Recently, Jimmy Patronis, the Chief Financial Officer of Florida (USA), has called on the state's pension fund managers to consider investing in Bitcoin.
Bitcoin is dubbed the "digital gold" due to its scarcity and long-term stable value. According to research from GSR, just allocating 1% of Bitcoin to a traditional investment portfolio (60% stocks, 40% bonds) has helped increase returns without significantly increasing the level of risk. Steve Lubka, an expert from Swan Bitcoin, said that for pension funds, allocating a small amount of Bitcoin could increase annual returns by 2-3%. This is an important figure for funds aiming for returns of more than 6% per year.
Although Bitcoin has high price volatility, it provides superior diversification capabilities due to its low correlation with traditional assets. Research from CF Benchmarks shows that with an allocation of less than 5% and regular rebalancing, Bitcoin can help the portfolio increase returns while reducing overall risk.
While pension funds typically prioritize stability, more and more traditional financial institutions are showing interest in Bitcoin thanks to financial products like spot Bitcoin ETFs. For example, the Wisconsin Investment Board has invested $164 million in a Bitcoin ETF, demonstrating a shift in the mindset of major investors.
