Bitcoin Volatility Threatens Portfolios Despite Growing Mainstream Acceptance

Hedgeye Asset Management's CIO John S. McNamara III and Portfolio Manager of the Hedgeye Hedged Bitcoin ETF (NYSE: HBIT) sat down to discuss the volatility problem with Bitcoin. According to Keith McCullough, investors have been complacent about the risks associated with investing in Bitcoin.

McCullough pointed out that Wall Street banks and asset managers have increasingly pushed Bitcoin as another allocation in traditional portfolios, but failed to address risk management. Bitcoin has experienced four drawdowns of more than 50% since 2011.

Even a small allocation to Bitcoin can consume an outsized share of a portfolio's risk budget due to its volatility. McNamara discussed the challenges of managing this volatility and downside risk while maintaining exposure to the asset.