- Adding 1% of Bitcoin to your portfolio gives you a 200 basis points upside
- If this Bitcoin position had gone to zero, you would only have had a 20-basis point downside
Recently, we shared how a tiny allocation of Bitcoin, as much as 10%, “considerably outperforms” a typical portfolio that involves equity and bonds.
Now, Anthony Pompliano, co-founder and partner at Morgan Creek Digital has an even better investment analysis for you to convince your family to make Bitcoin an essential part of their investment portfolio.
During the latest episode of analyst and trader, Luke Martin hosted Coinist Podcast Pompliano talks about the availability of overwhelming data in the past five years. However, a small percentage of BTC in your portfolio can provide you with an amazing upside.
“If you have a 60/40 global portfolio you got the return of about 7.2%. If you take in half percent from stocks, and a half a percent from bonds, and put it into Bitcoin, you would have gone from 7.2% to 9.2%, a 200 basis points upside,” explains Pomp.
Need help during the holidays to convince your friends, family, and loved ones about the importance of Bitcoin?
— Pomp 🌪 (@APompliano) December 24, 2019
While the upside is of 200 points, on the other hand, if you would have lost it all, it would have only cost you 20-basis points. So, it clearly is a lucrative investment option.
“If that one percent Bitcoin position had gone to zero, you lost all your money. It would have gone from 7.2% (original) to 7%, a 20-basis point downside. So, a 10:1 upside to downside. And the fact that it’s non-correlated ends up reducing the overall risk of the portfolio.”
No One Using US Dollar to Buy Coffee
It’s not just about returns and profitability either, Pomp also touched upon the qualitative side of it. He addresses the primary concern of non-bitcoiners and mainstream media that no one uses it.
But what they fail to realize is, “It’s one of the top 15 most popular currencies in the world.”
Moreover, the Bitcoin network on-chain transaction volume last year was more than that of Venmo, PayPal, or ApplePay. Not to mention It’s available in more countries.
*exhales deeply* PayPal blocked a transaction because I wrote the word “Tehran” in it. Didn’t realize this was happening and also that the word “Persian” is blocked too. https://t.co/64PLHexkmC
— Roya Shariat (@royashariat) December 24, 2019
But in the U.S., Pomp argues people don’t like to hear it because “we’re spoiled” and the US dollar works.
As for no one buying coffee with it, Pomp has this to say,
“I just went and bought coffee… I didn’t use dollars. I used credit. Most of the coffee bought at Starbucks, they use credit. They don’t use dollars. When do I settle that transaction? When I pay off my credit card at the end of the month. So people think “oh I am using dollars (at Starbucks).” No, you are not. You are using credit. And the reason you use the credit is because the dollars are actually harder to use than credit.”
Though the tax treatment, that has to be paid every time you purchase with BTC, needs to be improved, Bitcoin is on the same path as the physical money.
“If you think of it in layers, there’s gold, there’s paper claim on the gold, then there’s electronic money, then there’s credit built, etc. Well, that took a lot of time to build. The same thing is going to happen with Bitcoin,” Pomp said.