Ark Invest’s Big Ideas 2024 Report: Bitcoin’s Optimal Portfolio Allocation Soars to 19.4%

• The annual Big Ideas report is here, and Ark Invest has scaled its optimal Bitcoin portfolio allocation to 19.4%, up from just 0.5% in 2015, as the top crypto’s appeal spikes among institutional investors.
• If 19.4% of global wealth were invested in Bitcoin, the value of the crypto would shoot to $2.3 million and make it the world’s most valuable asset, over three times the value of gold.

The optimal allocation for Bitcoin on an investor’s portfolio in 2023 was 19.4% for the best risk-adjusted returns, with only gold at 40.7% and equities at 30.3% getting a higher share. This is according to Big Ideas, the annual report by Ark Invest that looks into the trends defining the investment world over the past seven years.

A tradition since 2017, “Big Ideas” is ARK’s seminal document, offering a comprehensive analysis of technological convergence and its potential to revolutionize industries and economies at a global scale. #BigIdeas2024 is now available! Download the report today.

— ARK Invest (@ARKInvest) January 31, 2024

When Ark first published its annual report, technologies like deep learning, 3D printing and robotics dominated. Digital assets only got a mention at the very end, with the company cautioning that while the market was optimistic cryptos would hit the $1 trillion mark in ten years, “rarely has an asset class seen that rate of growth in such a short period of time.” Ark recommended a portfolio allocation of just 0.5% to BTC.

Cryptos did just that, but it only took the market four years to hit this milestone in early 2021.

Ark’s annual reports have increasingly become bullish on Bitcoin, and in the latest one, the recommended allocation is a fifth of the portfolio. This is a threefold spike from last year’s recommendation of just 6.2%. Before that, it had never passed 5%.

The company, led by Wall Street titan Cathie Wood, says that when investing in Bitcoin, patience is key—those who have held it for the long term have reaped significant rewards.

Bitcoin’s volatility can obfuscate its long-term returns. While significant appreciation or depreciation can occur over the short term, a longterm investment horizon has been key to investing in bitcoin. Instead of “when,” the better question is “for how long?”

“Historically, investors who bought and held bitcoin for at least five years have profited, no matter when they made their purchases,” the report added.

Invest in Bitcoin, Advises Ark Invest

Globally, the investable asset base is estimated to be north of $250 trillion. According to Ark, if 1% of this (or $2.5 trillion) flowed into Bitcoin, the price potential for Bitcoin would be $120,000.

Since it started publishing its annual report, its average optimal allocation has stood at 4.8%. This allocation would potentially push Bitcoin to $550,000. Its most recent recommendation of 19.4% would translate to $48.5 trillion flowing into Bitcoin, pushing BTC to $2.3 million, the company believes.

Bitcoin has paid back its investors’ belief over the years, and 2023 was no different. Last year, it surged 155%; it started the year at $16,500 and ended 2023 north of $42000. While the price surge was important, the crypto market experienced more significant events, such as closures to some 2022 catastrophes, including Celsius, Luna, FTX and BlockFi. However, some have yet to be wrapped up fully.

Additionally, Bitcoin expanded beyond a store of value, with Ordinals bringing on-chain utility to the largest crypto.

At press time, BTC is changing hands at $42,147, barely changing over the past day.