Researchers from a consulting firm and a pension fund make the case for institutional investments in cryptocurrencies.
Bitcoin is largely unregulated, “very volatile,” difficult to hold — and should be included in institutional investors’ portfolios, according to a research paper by a hedge fund consultant and pension fund investor.
The case for investing in Bitcoin comes from Jim Kyung-Soo Liew, a finance professor at Johns Hopkins’ Carey Business School and chief executive officer of SoKat Consulting, and Levar Hewlett, a quantitative risk management associate at the Maryland State Retirement and Pension System. In a paper posted last month on research database SSRN, the authors pointed to the cryptocurrency’s “unique diversification benefits” and “attractive” risk-return profile.
“Institutional investors are under-allocated to BTC,” Liew and Hewlett wrote in the paper.
Bitcoin — the largest electronic currency with a market value of $253 billion on January 2 according to CoinMarketCap — had a rollercoaster 2017, soaring above $19,000 per coin before plummeting below $14,000 in a year-end rout. In December, two U.S. exchanges began trading Bitcoin futures, offering regulated trading options to investors.