Research Study
Bitcoin’s Evolving Role as an Alternative Investment
Understanding where bitcoin can fit in a portfolio
by Fidelity Digital Assets
October 30, 2024 • 30 min read
Executive Summary
In 2020, we assessed bitcoin’s properties and evaluated whether the asset belongs with other conventional alternative investments in a traditional portfolio. While bitcoin serves different roles to different people, the narrative that bitcoin should be considered as an alternative investment has persisted and perhaps grown over the past four years.
Over that time, much has changed from a macroeconomic and geopolitical standpoint. Despite significant changes in central bank monetary policy, interest rates, and geopolitical uncertainty, bitcoin’s resilience and growth have inspired conversations around its utility in a portfolio. This represents major progress in terms of the asset’s reputation, as just a few years ago many investors viewed bitcoin simply as a form of digital money used for anonymous transactions.
In this updated report, we revisit the narrative that bitcoin is an uncorrelated asset that can serve a similar role as an alternative investment in improving a portfolio’s risk-adjusted returns.
We also review:
- Investors’ rationale for including alternative investments in a portfolio
- Bitcoin’s characteristics that may offer sustainable portfolio diversification
- Historical analysis of bitcoin’s impact on a portfolio
The information herein was prepared by Fidelity Digital Asset Services, LLC (“FDAS LLC”) and Fidelity Digital Assets, Ltd (“FDA LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer to buy or sell any asset. Perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.
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