ARK Invest suggests that a Bitcoin portfolio allocation of 19.4% is optimal for generating risk-adjusted returns.

Bitcoin’s historical outperformance of major assets is highlighted in a 2023 research report from ARK Invest, which suggests that institutional portfolios should allocate as much as 19.4% to maximize risk-adjusted returns. The investment management firm released its annual report on January 31, focusing on the technological convergence of blockchain technology, artificial intelligence, energy storage, and robotics. A significant portion of the report examines Bitcoin portfolio allocation and its performance over the past three years. ARK presents data showing that Bitcoin has outperformed other major traditional investment assets over longer time frames, with an average annualized return of 44% over the past seven years compared to 5.7% for other assets. The report also addresses the volatility and return profiles of traditional asset classes, suggesting that a portfolio aiming for maximized risk-adjusted returns in 2023 should allocate 19.4% to Bitcoin. ARK’s research also considers a hypothetical scenario where institutional investments from the global investable asset base follow the 19.4% Bitcoin portfolio allocation. Depending on the percentage of global asset allocation, Bitcoin’s price could reach $120,000, $550,000, or a staggering $2.3 million per coin. ARK’s research takes into account empirical market data to arrive at its 19.4% Bitcoin allocation, which represents a departure from previous years’ allocations suggested by other investment analysts and experts.