Bitcoin acts like risky tech stocks right now, but is it good or bad?

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Bitcoin acts like risky tech stocks these days, in other words Bitcoin carries the same high risk and high reward opportunities as a fledgling startup.
Bitcoin, up 60% year-to-date, has outperformed tech stocks such as iPhone-maker Apple, search giant Google, online retail behemoth Amazon and social network Facebook, which have surged during the coronavirus pandemic
Now, London-based digital asset management firm CoinShares has suggested investors allocate 4% of their portfolios to bitcoin, saying that “bitcoin, in its growth phase, behaves like a tech stock.”
That’s the conclusion of an Aug. 10 report in which authors James Butterfill and Christopher Bendiksen arguing the fact that Bitcoin (BTC) “starting its life at a price of zero”.
Unlike many analysts who suggest setting aside just 1% of a portfolio for cryptocurrencies, CoinShares suggested investors allocate “just under 4%” for Bitcoin alone”.
They tested Bitcoin as a reliable store of value by seeing how the cryptocurrency performed as part of a balanced 60/40 portfolio. It’s analysis showed that the token enhanced annualized returns by 9.7% starting from 2015, almost double comparable assets.
“Having started its life at a price of zero, it’s no surprise that bitcoin’s investment performance, like that of successful start-ups, has been stellar,” CoinShares’ research strategist James Butterfill wrote in a report out this week.
“As a disruptive technology, bitcoin’s risk profile is rather similar to that of a technology stock: if it reaches its potential, the value could be immense, but at the same time, there is a chance it fails entirely, leaving the value of bitcoins close to zero.”
It is not bad and frightening that Bitcoin acts like risky tech stocks. Since the crypto bloodbath in March, tech stocks have gained massive ground. The price of Amazon rose 70.7% to $3,170, Apple rose 63.3% to $450, Facebook 54.5% to $263, and Google 23.6% to $1,496.
The report comes after a period of volatility with Bitcoin testing the $12,000 threshold for the first time since lastyear.
“Bitcoin is an asset in its infancy,” the Coinshares report states. “As Bitcoin matures, its robustness is further proven, and its risk of failure moves further and further away from zero, we believe investors will start treating it differently, leading its macroeconomic behaviour to follow suit.”
 

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