🍺Does Bitcoin Belong In Your Nest Egg?

Author

Jordan Batchelor
October 30, 2024

What’s Up, Poor People?

Thanks for stopping by Poor Boy—whether you’re here for some bathroom reading or genuinely curious about what the hype is with Bitcoin. Today, we’re asking, “How much Bitcoin is too much?” This topic’s hotter than ever because BlackRock, the asset management giant, threw down over a billion dollars on Bitcoin ETFs BlackRock's billion-dollar bitcoin bet could signal crypto's next big boom, sparking talk about a massive price boom and potential institutional takeover. With big players like BlackRock calling the shots, it feels like the wild west in finance, and Bitcoin’s got a starring role.

Now, this isn’t a deep dive into Bitcoin’s ins and outs—that’s a journey you’ll want to take on your own if you’re interested. Today, we’re just skimming the surface to see if even a sprinkle of Bitcoin is worth the ride in a traditional 60/40 portfolio.

Today's Report: Is Even a Little Bitcoin Too Much for Your Portfolio? by Stephen Margaria, Morningstar

Author’s Poor:

  • Tiny Bits, Big Impact: At a modest 1-2% allocation, Bitcoin’s effect on overall portfolio risk is manageable. But once you hit 5%, things start tipping fast. At this level, Bitcoin adds serious volatility—at 25%, your portfolio’s risk doubles. High stakes, right? The name of the game is risk management.

  • Correlation Woes: Once, Bitcoin was considered an uncorrelated asset. But as its popularity has risen, so has its relationship with stock market movements. When stocks take a hit, Bitcoin may just follow—something to keep in mind before adding it as a “diversifier.”

  • Drawdown Drama: The 2021-2022 “crypto winter” proved Bitcoin isn’t a safe haven. Adding Bitcoin may boost returns long-term, but in serious market dips, it adds volatility. Holding through these downturns takes guts (or maybe a cast-iron stomach).

My Poor:

I’ve been on and off the Bitcoin train since 2017 without fully understanding it. Today, still don’t fully understand it. I made a few bucks along the way, but in hindsight, I wish I’d held onto my original stash. I try to keep my Bitcoin allocation around 5% of my total portfolio, but the high growth typically increases the allocation over time. When it crosses the 10% mark, I rebalance back to 5%—though going forward, I’ve decided not to rebalance and go against the advice of the article in today’s report. I

Historically, Bitcoin’s surges were driven by retail investors piling in, especially around “halving” events every four years. But this time, it feels different. Bitcoin ETFs became available this year and companies like MicroStrategy provide traditional stock market investors exposure to bitcoin.

Do I have a crystal ball? No.
Will Bitcoin take over the world? I am not qualified to answer that.
Does the entire internet predict that the price skyrockets? Yes.
Are large institutions going to bring lots cheddah to the pot. They already have….

So with that I leave you with a quote, 

“It might make sense just to get some in case it catches on.”

-Satoshi Nakamoto, Creator of Bitcoin-

Thanks for hanging out. Shoot me an email if you have strong thoughts on this type of topic. I’m curious what you think.

Here’s an article about Bitcoin ETFs.
Spot Bitcoin ETFs: Everything You Need to Know

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If you want to connect, reply to this email and let me know what you think.

-Jordan Batchelor-

Disclaimer: The content provided in The Poor Boy Report (PBR) is for educational and informational purposes only and should not be considered as professional financial advice or investment recommendations. All information presented is based on personal opinions and research and may not reflect the most current developments in personal finance.

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