Another institution is optimistic! Wall Street veteran financial giant AllianceBernstein: Bitcoin should account for more than 1.5% of investment portfolios

Another traditional financial institution that sees Bitcoin as part of an investment portfolio has emerged recently. According to foreign media CoinDesk, asset management firm AllianceBernstein stated in a research report sent to clients that cryptocurrencies should have a place in asset allocation.

AllianceBernstein Asset Management Institution

AllianceBernstein (AB) was founded in 1967 and has branches worldwide. Despite having withdrawn its headquarters from Wall Street, its assets under management are still around $500 billion. Following the global impact of the COVID-19 pandemic, national debt levels have risen, leading investors to diversify their asset allocations.

According to Bernstein Research and Co-Head of Portfolio Strategy Fraser Jenkins, Bitcoin is increasingly seen as a mature asset that can be part of a portfolio, with the only concern being regulatory uncertainty. Jenkins stated:

Bitcoin's price volatility has significantly decreased, making it more attractive as a store of value or medium of exchange. In the wake of the COVID-19 pandemic, Bitcoin's correlation with mainstream traditional assets has also increased, and its liquidity allows for quick selling, as seen during the March crash.

Recommended Portfolio Allocation of Over 1.5%

Jenkins believes that the reasons people expect Bitcoin to rise are similar to those for gold. While Bitcoin may not immediately rise in value during specific fiat currency devaluations, it can serve as a hedge against currency inflation and devaluation.

Therefore, the research report recommends allocating 1.5% to 10% of the portfolio to Bitcoin, with the specific percentage depending on the monthly performance of cryptocurrencies.

However, the report also raises other issues, such as the growth of cryptocurrency use in illegal activities, energy consumption from Bitcoin mining, which are common negative views on Bitcoin. Regulatory scrutiny is also increasing, as Jenkins noted:

There may be potential issues with Bitcoin in the future, as the COVID-19 pandemic could ultimately lead governments to increase intervention in economic and monetary policies. If the scale of cryptocurrencies surpasses current levels, it may become a focal point for decision-makers worldwide.

"Cryptocurrencies indeed deserve a place in asset allocation, as long as they are legal!" Jenkins emphasized.

Many financial institutions may follow AllianceBernstein's view in the future. In fact, AllianceBernstein excluded Bitcoin in 2018 and 2019 mainly due to uncertainties about its value, including the inability to generate actual cash flow, lack of specific use cases, and the absence of aesthetic or cultural appeal like precious metals or art.

Recent reports have shown a change in attitude towards Bitcoin, including from "Guggenheim Partners LLC," a $260 billion investment institution owned by the Guggenheim family, the second wealthiest family globally after the Rothschilds. They plan to allocate 10% of their $5.3 billion Macro Opportunities Fund into Grayscale's Bitcoin Trust Fund (GBTC).