Education

The Case for Crypto in an Institutional Portfolio

San Francisco • August 10, 2021

This paper revisits the case for adding crypto assets to a diversified portfolio of stocks and bonds by updating the data in a previous paper.

We consider the impact that different allocations to crypto assets would have had on a Traditional Portfolio consisting of 60% equities and 40% bonds under a myriad of different market regimes. The results show that crypto would have contributed positively to a diversified portfolio’s cumulative and risk-adjusted returns in 100% of three-year periods, 97% of two-year periods, and 77% of one-year periods since 2014, assuming quarterly rebalancing. Crypto has positively impacted portfolios even over periods in which crypto’s price has declined.

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About Bitwise

Based in San Francisco, Bitwise is one of the largest and fastest-growing crypto asset managers. As of year-end 2021, Bitwise managed $1.3 billion across an expanding suite of investment solutions. The firm is known for managing the world’s largest crypto index fund (OTCQX: BITW) and pioneering products spanning Bitcoin, Ethereum, DeFi, and crypto-focused equity indexes. Bitwise focuses on partnering with financial advisors and investment professionals to provide quality education and research. The team at Bitwise combines expertise in technology with decades of experience in traditional asset management and indexing, coming from firms including BlackRock, Blackstone, Meta, and Google, as well as the U.S. Attorney’s Office. Bitwise is backed by leading institutional investors and asset management executives, and has been profiled in Institutional Investor, CNBC, Barron’s, Bloomberg, and The Wall Street Journal.

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