Bitcoin is just a bit over 5% of my portfolio at the moment. I’m using the same dynamic volatility targeting I use for the stock and bond ETFs, but because of its sky-high volatility, that means I have to leverage down. BTC has historically been (mostly) uncorrelated with the stock market, which makes it a powerful portfolio diversifier.
This means that your portfolio’s overall volatility can actually be made lower by adding the extremely volatile Bitcoins to the mix, counterintuitive as that may seem, but only by adding them in sufficiently small amounts.
Bitcoin is (by design) very deflationary, which can make it a good investment in the short term, but I fear the risk of total collapse in the long term can’t be ignored. But at only about 5% of my portfolio, Bitcoin could drop to zero tomorrow, and I’d still be OK. In the meantime, I’ll be pulling out money as the bubble inflates by keeping my volatility exposure to it balanced in my portfolio.
Bitcoin is just a bit over 5% of my portfolio at the moment. I’m using the same dynamic volatility targeting I use for the stock and bond ETFs, but because of its sky-high volatility, that means I have to leverage down. BTC has historically been (mostly) uncorrelated with the stock market, which makes it a powerful portfolio diversifier.
This means that your portfolio’s overall volatility can actually be made lower by adding the extremely volatile Bitcoins to the mix, counterintuitive as that may seem, but only by adding them in sufficiently small amounts.
Bitcoin is (by design) very deflationary, which can make it a good investment in the short term, but I fear the risk of total collapse in the long term can’t be ignored. But at only about 5% of my portfolio, Bitcoin could drop to zero tomorrow, and I’d still be OK. In the meantime, I’ll be pulling out money as the bubble inflates by keeping my volatility exposure to it balanced in my portfolio.