A 1% Allocation To Bitcoin

A 1% Allocation To Bitcoin.

That’s all it takes to expose yourself to the potential upside of Bitcoin. Just 1% of your financial portfolio.

That’s too small of a bet to add much downside risk to your overall portfolio (a 1% loss is worst-case scenario), but it offers a significant upside if Bitcoin prices do grow by 10, 100, or even 1,000.

Back in 2018, this is exactly the type of Bitcoin allocation that Wences Cesares advocated for. In his blog post titled ‘The case for a small allocation to Bitcoin’, he said the following:

“I suggest that a $10 million portfolio should invest at most $100,000 in Bitcoin (up to 1% but not more as the risk of losing this investment is high). If Bitcoin fails, this portfolio will lose at most $100,000 or 1% of its value over 3 to 5 years, which most portfolios can bear. But if Bitcoin succeeds, in 7 to 10 years those $100,000 may be worth more than $25 million, more than twice the value of the entire initial portfolio.”

Back then (March 2019), 1 Bitcoin was worth roughly $4,000 and 17.5 million were in circulation. Today, each one is worth over $8,000 and there are 18.4 million BTC in circulation.

This means that prices have more than doubled in the last 14 months, and the number of remaining Bitcoin to be mined has dropped by over 25%. This reinforces both Bitcoin’s value and it’s scarcity.

And with the 3rd Bitcoin halving occuring earlier today, the issuance of new coins has now dropped to just 6.25 every 10 minutes. While the Bitcoin community is celebrating this achievement, the concepts of scarcity and value are spreading beyond “Crypto Twitter” to the largest hedge funds in the world.

Paul Tudor Jones: Wences Cesares 2.0?

Earlier today, Paul Tudor Jones went on CNBC to clarify his position on Bitcoin. Just like in Wences Cesares’ blog post, Paul mentioned that his allocation was somewhere between 1-2% of his portfolio and that he viewed Bitcoin as an asset with a high potential upside.

Simply put, having one of the world’s largest hedge fund managers on national TV talking about Bitcoin’s position in a portfolio is a great sign that Bitcoin is maturing as an asset class.

And at the exact same time, Bitcoin’s monetary policy now stands in direct opposition to that of the Fed. Instead of increasing supply, Bitcoin supply is quickly disappearing.