Bitcoin Fails as Portfolio Asset, Says Bloomberg Analyst

Bloomberg Intelligence senior commodities strategist Mike McGlone has expressed concerns about Bitcoin's (BTC) performance as a portfolio asset. According to McGlone, Bitcoin has failed in this space, and its performance over the past decade should be questioned.

The MarketVector Digital Assets 100 Index (MVDA), which includes approximately two-thirds of Bitcoin, has underperformed the Nasdaq-100 index on a risk-adjusted basis since 2017. This is concerning for investors who consider adding digital assets to their portfolios as a way to manage risk.

McGlone pointed out that the MVDA has shown approximately three times more volatility than the Nasdaq-100 Index (NDX) since 2017, but this increased volatility has not resulted in significant additional returns compared to traditional assets. This, he argues, indicates that crypto assets have performed poorly in terms of risk and portfolio management.

The analyst also noted that Bitcoin's positive correlation with stocks limits its ability to function as a risk-reducing tool independent of traditional assets. Additionally, McGlone mentioned that significant bullish catalysts for cryptocurrencies are largely already priced in, making it difficult for digital assets to deliver uniquely strong returns compared to traditional assets in the future.