Yale Professor: Bitcoin is an indispensable part of portfolio!
In a study, Yale professor Aleh Tsyvinski investigated the properties of various cryptocurrencies and came to the conclusion that each portfolio should contain Bitcoin – whether crypto-investor or skeptic.
Investors who believe Bitcoin will continue to grow and increase in value should invest at least six percent in the digital currency. Those who are generally averse to cryptocoin should equip at least four percent of their portfolio with Bitcoin. Absolute minimum alone for diversification purposes, however, one percent.
The Yale professor came to this conclusion in the context of his study “Risks and Returns of Cryptocurrencies”. He compared digital currencies with traditional asset classes such as stocks or bonds. However, only Bitcoin, Ethereum and Ripple were part of the investigations.
The study found that cryptocurrencies could not be classified as traditional currencies or as equities due to many factors. “Our findings cast doubt on popular narratives that cryptocurrencies derive their value from either a unit of account, such as common currency, or as store of value, such as precious metals,” says Tsyvinski. To this end, he examined market sentiment in 354 industries in the US and 137 industries in China and found that digital assets had the ability to disrupt markets, whereas Bitcoin did not. While succeeding in producing positive disruptions in healthcare and the consumer goods industry, Bitcoin does not have the potential to disrupt financials,
Ultimately, the digital currency is still essential in any investment portfolio, because crypto currencies, despite extreme volatility, a higher return potential than other asset classes, Tsyvinksi summarizes his findings.
Professor Dragan Boscovic of Arizona State University also came to a similar conclusion in an earlier study: “Institutional investors recognize this new asset as a valuable investment opportunity, which will encourage private investors, and will also encourage consumers and small businesses to trade to start from cryptocurrencies “.
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Categories: Crypto Currency