- Bitcoin pushes for a daily high so far of USD 9,392
- All-time high buys are still good for a portfolio, says Bitwise
- Aurum Capital insists a USD 100,000 Bitcoin valuation will be likely by 2022
Bitcoin markets are jumping today, as hours after the last difficult adjustment on the Bitcoin network before the reward halving event happened (adjusting up by about 0.88%), price not only regained lost ground above USD 9,000, but pushed to a higher high of USD 9,392 (CoinDesk).
And if you’re a Bitcoiner who bought in late 2017 or early 2018, do not fret, there is still plenty of time for you to accumulate right now, while waiting for price to reach the old all-time high near USD 20,000. In fact, Bitwise research now says that Bitcoin almost always boosts a mixed portfolio’s value, even when bought at the highest-ever price, provided a correct management strategy is used.
Using data from historical data on a test portfolio using historical data, the asset manager found a significant increase in cumulative returns over the last three years for those who invested a small percentage of Bitcoin into a portfolio largely made up of bonds and stocks. Head of research, Matt Hougan, who co-authored their latest report, noted that only 2.5% allocation of Bitcoin in January 2014, rebalanced on a quarterly basis, would have boosted portfolio returns from 26% to almost 45% by the end of March in 2020. Doubling that allocation would have boosted a traditional portfolio’s returns by about twice as much in the same period to 65%.
The data isn’t very surprising, given that the starting price of Bitcoin at that range was USD 750, and ended March at USD 6,500 this year, giving it an almost nine times growth factor in just six years. Even after falling from its heights in late 2017, Bitcoin is still the decade’s best-performing asset!
However, the firm also found a paradox in results. When taking calculations from a different portfolio of 60% world equity and 40% bonds, allocating the same amount of Bitcoin and assuming quarterly rebalancing on the same period, the value of the portfolio would have actually gone down by 0.54%. This suggested that although Bitcoin was an extremely volatile asset, it remained uncorrelated to most other assets in general.
Just the precise component needed for so-called volatility harvesting, a fairly new wealth management strategy only emerging in 2012. In this strategy, value is shaved of from well-performing but volatile assets, and used to rebalance and boost returns, locking gains into more stable assets like blue-chip stocks. The report explains:
“Adding bitcoin to a diversified portfolio of stocks and bonds would have consistently and significantly increased both the cumulative and risk-adjusted returns of that portfolio over any meaningful time period in bitcoin’s history, provided a rebalancing strategy is in place.”
Meanwhile, crypto mining company Aurum Capital has come out with bold predictions that put a likely price tag on Bitcoin at USD 100,000 by 2022.
With just five days on the clock to the much anticipated Bitcoin reward halving event, the number of analysts now prone to adjust their price predictions towards the upside is increasing, and Aurum Capital is just the latest to pipe in on six-digit valuations.
Aurum Capital Ventures states in today’s call that #Bitcoin will hit $100,000 by 2022.
— JWilliamsFstmed (@JWilliamsFstmed) May 5, 2020
Shared by Morgan Creek Digital co-founder Jason A Williams, a Tweet says simply that the mining company, only four years in operations, gave him the round number in a business call. This joins the likes of Pantera Capital’s CEO Dan Morehead, who gives an even earlier date of August next year for Bitcoin to go six figures, with a rather precise USD 115,212 on his calling card, based on the popular stock-to-flow (S2F) ratio model put across each halving.
In his latest letter to investors, Morehead puts out a bleak sentiment on what he says is “a really distressing, massively confusing time” but talks of hopeful times with an upbeat outlook on crypto, saying:
“Tokens are up 32% since we last wrote. In the meantime we have been buying venture deals — either directly or in the secondary markets — at discounts of 20–36% from where they were trading just before the crisis… Just sayin’ that there’s more than a 50–50 chance bitcoin goes up — and goes up big.”
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