In a note to its clients, strategists at JPMorgan have suggested a one percent allocation of portfolio to hedge against fluctuations in traditional asset classes like stocks, bonds and commodities.
The reason for this small allocation is to mitigate the risk of any downturn in the digital asset’s value. According to Bloomberg, JPM strategists Joyce Chang and Amy Ho stated in a note to clients:
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,”
The JPMorgan analysts added that crypto assets should be treated as investment vehicles and not funding currencies such as USD or JPY.
Bitcoin has declined 20% since its all-time high of over $58,000 on Feb. 21 but it is up 60% since the beginning of this year.
Victor Nnadi is an Independent Economics Researcher and a Securities Trader.
