Investor exposure to Bitcoin and Ether, the top two cryptocurrencies, can significantly enhance the performance of traditional investment portfolios. Philippe Meyer, the head of digital and blockchain solutions at BBVA, believes that incorporating Bitcoin (BTC) and Ether (ETH) into portfolios will greatly enhance the return on investment (ROI).
Speaking at the Web3 Corporate Innovation Day panel, Meyer noted that introducing a small percentage of digital assets like Bitcoin or Ether has shown to greatly improve portfolio performance. He suggested that allocating 3% to 5% of a portfolio to cryptocurrencies can lead to a substantial increase in investor returns.
Meyer’s remarks come at a time when the cryptocurrency market is experiencing a bullish cycle, with Bitcoin’s price surging over 146% in the past year, currently trading above $65,383 according to CoinMarketCap data.
In comparison to the stock market index S&P 500, Bitcoin has significantly outperformed in 2024. Year-to-date, Bitcoin’s price has increased by over 47%, while the S&P 500 has only risen by 15%, as per TradingView data. This indicates that Bitcoin has outperformed the index by more than threefold.
Looking at the yearly timeframe, Bitcoin’s price has surged by 147%, while the S&P 500 has only seen a 24% increase, showcasing Bitcoin’s outperformance by over sixfold. However, in the short term, Bitcoin has dipped by 2.3% on the monthly chart, while the S&P 500 has risen by 2.8% during the same period.
Despite the recent correction in Bitcoin’s price, attributed to decreasing inflows from U.S. spot Bitcoin exchange-traded funds (ETFs), the overall outlook remains positive. U.S. Bitcoin ETFs witnessed a streak of 20 days of net positive inflows break, with three days of negative outflows recorded recently. This resulted in over $145 million worth of outflows on June 17, according to Farside Investors data.
The decline in ETF inflows is primarily due to investors lacking conviction and selling below their initial investment, noted Jag Kooner, head of derivatives at Bitfinex. Despite the short-term fluctuations, the long-term potential of Bitcoin and Ether in investment portfolios remains promising.