Bitcoin has created a new asset class that may become one of the biggest technological developments since the Internet. Here’s why we believe it will continue to differentiate itself further from traditional asset classes as time goes by.

A golden opportunity?

Today, many consider bitcoin  to be the equivalent of “digital gold.” Consider that bitcoin shares many of the same attractive properties of gold that have made it a great store of value for centuries. Both:

  • Are borderless and have no centralized power or government that controls their supply
  • Are globally recognized and easily verifiable
  • Have limited supplies.

However, bitcoin has modernized and improved some of these properties that position it as an attractive alternative to gold. Unlike gold, bitcoin:

  • Is easily divisible into smaller units
  • Is weightless and does not require high storage costs 
  • Can travel across borders in the same frictionless way that information is shared across the Internet.

Bitcoin has a history of strong performance

Bitcoin has become an institutional asset class in less than a decade. This is perhaps unsurprising given that:

  • Bitcoin was the first cryptocurrency and is still the largest by market cap.
  • Over the long-term, bitcoin has exhibited a low, and even negative, correlation to most major equity and fixed-income asset classes, currencies and commodities.
  •  According to Galaxy Capital Management, compared to traditional assets like stocks, bonds and cash, bitcoin has been the best performer over the one, three, and five year periods.
Asset ClassYTD    1-Year3-Years5-Years
Bitcoin    103.3%809.7%760.4%14,044.2%
S&P 5006.2%56.4%59.3%112.7%
Gold-10.0%    8.3%28.8%38.5%

Source: Bloomberg Finance L.P., as of March 31, 2021

How bitcoin can add value to your portfolio

Bitcoin’s history of positive returns and it’s uncorrelated nature make it an attractive addition to traditional portfolios. Despite its volatility, adding a small portfolio allocation to bitcoin generally increases the overall expected return and improves the portfolio’s expected risk-adjusted returns. 

It’s also worth considering that most modern portfolios present a fair degree of inherent systemic risk in the financial system. Adding bitcoin to an investment portfolio diversifies away some of this systemic risk. We believe there are two broad themes for investing in bitcoin, which include using it as:

  1. A macroeconomic inflation hedge – due to its scarcity, low correlation, and the fact that its supply is resistant to government control
  2. A growth asset – since it has significantly outperformed all major asset classes over the short and long-term (see chart above), it has room to grow and is increasingly being adopted by major companies around the world.

How to invest in bitcoin?

It can be complicated and expensive for individuals to access and invest in bitcoin. But, CI Galaxy Bitcoin ETF (BTCX) makes it easy for all investors to access bitcoin. BTCX is:

Direct    Simple    Secure Cost-effectiveSmart
The fund only invests in real bitcoin.    You get exposure to bitcoin without the hassle of keys, wallets, cold storage, or the need to convert to cash.The fund’s bitcoin is stored safely in “cold” storage that is completely offline. This exciting crypto ETF has no investment minimums (bitcoin was as high as $57,000 per coin on 2/21/21).The expertise of cryptocurrency leaders Galaxy Digital Asset Management and CI Global Asset Management

If you're interested in bitcoin and cryptocurrencies, and the role these digital assets can play in your portfolio, you can learn more at: ci.com/bitcoin. 


Source: Galaxy Digital