J.P. Morgan advises against investing bitcoin as part of a core portfolio due to regulatory uncertainty and volatility. However, for aggressive investors willing to accept the risks, bitcoin may be suitable as a satellite allocation.
Bitcoin’s market capitalization has reached $2 trillion, and its price has fluctuated significantly over the past decade. While it offers potential for significant returns, its correlation with traditional assets is low, making it difficult to classify using traditional asset allocation frameworks.
To understand the benefits and risks of bitcoin, investors must consider its volatility, regulatory landscape, and how it interacts with other assets. A small allocation may introduce unacceptable risk for ultra-conservative portfolios or near-term funds. Aggressive investors should carefully size their bitcoin allocations and manage their risk.
As the digital asset ecosystem expands, new opportunities and risks will arise. The increasing adoption of USD-pegged stablecoins could reinforce the dollar’s dominance, potentially slowing crypto adoption.
Source: https://privatebank.jpmorgan.com/nam/en/insights/markets-and-investing/ideas-and-insights/bitcoins-role-in-investing-what-you-need-to-know