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Used correctly, cryptocurrencies including bitcoin can reduce overall portfolio risk, financial advisors and market analysts said.
The same assets, held without a clear framework, amplify volatility rather than absorb it. Execution is the variable that separates the two outcomes.
The diversification premise Portfolio diversification is the specific function advisors are evaluating when clients raise crypto. Bitcoin is the named example asset in that assessment.
An asset that does not move in lockstep with traditional holdings can, in principle, reduce portfolio variance, but only when the allocation is sized and managed with that goal as the explicit objective.
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