At the end of 2020, our research suggested it was possible to mitigate Bitcoin’s volatility with relatively straightforward portfolio techniques. In the time since then, Bitcoin has continued to demonstrate its propensity for mood swings—and our analysis continues to suggest it has been possible to tame them while also boosting overall portfolio performance.
Digital asset volatility has made headlines recently, but its whipsawing performance is hardly an emerging trend. Looking back over the past six years, the FTSE Bitcoin Index—which reflects the settlement price of Bitcoin—has consistently exhibited higher volatility than both large and small cap equities. It’s also been more volatile than commodities such as natural gas and gold—even when compared to their most tumultuous years.
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