Bitcoin acts more as a technology startup than as digital gold; investors reap great rewards if it works, but potentially lose everything if the cryptoactive fails.
That’s the conclusion of an Aug. 10 report from digital asset manager CoinShares entitled „A Little Bit of Bitcoin Goes a Long Way. In it, authors James Butterfill and Christopher Bendiksen argue that the fact that Bitcoin (BTC) „started its life at a zero price“ gave it a stellar reputation.
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„If it reaches its potential, the value could be immense,“ the report says.
„At the same time, there is a non-nil chance that it will fail completely, leaving the Bitcoin value close to zero.“
Unlike many experts who suggest reserving 1% of a portfolio for crypto-currencies, CoinShares suggested that investors allocate „just under 4%“ for Bitcoin alone.
The company tested Bitcoin as a reliable store of value by seeing how crypto currency behaved as part of a balanced 60/40 portfolio. Their analysis indicated that the token improved annualized returns by 9.7 percent from 2015, almost double the comparable assets.
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Beginning to mature in the reserve of value
Behaving as a technology asset is not a bad thing. Since the crypto-currency bloodbath in March, technology stocks have gained enormous ground. Amazon’s price rose 70.7% to USD 3,170, Apple’s 63.3% to USD 450, Facebook’s 54.5% to USD 263 and Google’s 23.6% to USD 1,496.
The report comes after a period of volatility in which Bitcoin tests the $12,000 threshold for the first time since 2019.
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„Bitcoin is an asset in its infancy,“ says the Coinshares report. „As Bitcoin Code matures, its robustness is proven even more, and its risk of failure is moving further and further away from zero. We believe that investors will start to treat it differently, driving its macroeconomic performance to follow suit.