"A 30% jump in returns by adding just 1%?"...Fidelity reveals the truth about Bitcoin inclusion

▲ Bitcoin (BTC)/ChatGPT generated image

Fidelity assessed that Bitcoin (BTC) should be considered a core component of modern investment portfolios, and released an analysis suggesting that even a 1% allocation could significantly boost the long-term returns of traditional portfolios.

Benzinga reported on May 5th, citing Fidelity's analysis, that Bitcoin has evolved into a major asset class based on its strong long-term performance and diversification benefits. Fidelity assessed that Bitcoin has grown to a level where it competes with traditional markets in terms of scale, and has frequently ranked among the top performers in terms of long-term returns.

According to Fidelity, Bitcoin outperformed comparable assets for approximately 73% of the period. The report highlighted Bitcoin's strong risk-adjusted returns and its correlation with global money supply, suggesting it can serve as a hedge against monetary inflation.

Bitcoin's low correlation with stocks and bonds was also presented as a factor supporting portfolio diversification. Fidelity explained that Bitcoin's fixed supply structure and expanding network adoption are key reasons why it moves differently from traditional assets.

The core of the analysis is the effect of small allocations. Fidelity's analysis showed that adding just 1% Bitcoin to a traditional 60/40 portfolio increased compounded returns by approximately 30% and improved risk-adjusted returns by 20%. Drawdowns showed only a limited impact. Fidelity assessed that the initial allocation range of 1% to 2% provided the greatest efficiency.

The effects were even more pronounced in corporate treasury portfolios. A 1% Bitcoin allocation more than doubled returns, reduced drawdowns, and improved the Sharpe ratio by over 40%. Fidelity's analysis focused on how initial Bitcoin exposure, 'moving away from zero,' created the most significant performance improvements relative to additional risk, rather than large-scale allocations.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*