Analysts from K33 Research have highlighted that the approval of bitcoin spot ETFs in the United States could streamline access to bitcoin exposure, thereby reducing traditional portfolio risk. The latest report from K33 Research suggests that the introduction of such ETFs would enable investors to diversify into the digital asset, potentially enhancing the risk-adjusted performance of traditional 60/40 portfolios.
According to Senior Analyst Vetle Lunde and Vice President Anders Helseth, diversification and risk-adjusted outperformance are anticipated to be key strategies employed by various ETF providers entering the market. The report emphasizes that since 2020, bitcoin has demonstrated its effectiveness as a robust tool for portfolio diversification.
The analysts argue that even amid the crypto market turbulence in 2022, bitcoin exposure would have improved risk-adjusted returns in a traditional portfolio due to softened correlations and substantial upside potential. They point out that an investor with 1% exposure to bitcoin in a traditional 60/40 portfolio would have outperformed a portfolio without bitcoin exposure by 3.16%.
The recent delay by the Securities and Exchange Commission (SEC) in approving Hashdex and Franklin’s proposed bitcoin spot ETFs, along with the postponement of Global X’s application, has created a waiting period until the next deadline on January 10. The analysts suggest that such delays might temporarily slow momentum in the crypto markets as investors await significant news related to ETF approvals.
This analysis underscores the potential positive impact of simplified access to bitcoin through spot ETFs on traditional investment portfolios.