Investment Manager AllianceBernstein with assets of $631 billion announced a change in its attitude to bitcoin.
According to CoinDesk, in a report to clients, the firm writes that it did not consider bitcoin as an investment asset in January 2018, when the cryptocurrency was approaching the $20,000 level for the first time. However, changes in political conditions, debt levels, and the need for diversification amid the coronavirus pandemic have forced AllianceBernstein to "recognize that bitcoin is indeed" subject to consideration when making asset allocation decisions, at least as part of long-term strategies.
The company notes a" significant decrease " in bitcoin's volatility, which makes it more attractive as a means of accumulation and payments. In addition, bitcoin remains a liquid asset and can be quickly sold, as it was during the March collapse.
"From a purely empirical point of view, the reduced volatility of bitcoin makes it more attractive, but the increased correlation [with other assets] points in a different direction," AllianceBernstein writes.
According to analysts, bitcoin can play the same role as gold in the issue of hedging inflation.
At the same time, the company notes that in the future, bitcoin may face new obstacles, since against the background of the pandemic, the authorities are increasing their participation in the economy and cryptocurrencies may not fit into their plans. In addition, it has other problems, such as use in criminal activities and high energy consumption.
"Cryptocurrencies do have a place in asset allocation... as long as they are legal!" the authors write.
Ultimately, they recommend investing between 1.5% and 10% of assets in bitcoin, depending on the cryptocurrency's monthly return. "The resulting allocation to bitcoin is small, but then a simple optimization strategy leads to allocations in some other asset classes becoming zero. In this context, bitcoin empirically seems potentially significant, " the report says.