Holding Firm Despite Turbulence… Three Reasons Bitcoin Is Impossible to Give Up

▲ Bitcoin, Gold

Despite extreme volatility surrounding Bitcoin (BTC), some investors continue to argue that it still deserves a certain allocation within a portfolio.

As of February 8 (local time), Bitcoin is viewed as serving a dual role as a long-term hedge against inflation and the simplest gateway to gain exposure to the broader crypto asset market. With its total supply capped at 21 million coins, it can function as an alternative asset if the value of fiat currencies is diluted over time. However, rather than a safe haven that responds to short-term price fluctuations, it is closer to an insurance policy against long-term currency devaluation, making an awareness of volatility essential.

A second rationale is that Bitcoin remains the core pillar of the crypto market. Out of a total crypto market capitalization of roughly $2.5 trillion, Bitcoin accounts for about $1.4 trillion. In most market phases, Bitcoin’s direction has influenced the broader altcoin market, positioning it as a representative asset that offers exposure to the entire market without the risks associated with selecting individual tokens.

The third reason is improved accessibility. Recently, spot Bitcoin ETFs have made it easier for retail investors as well as pension funds and corporations to invest in Bitcoin. As a result, Bitcoin holdings by conservative entities such as governments, companies, and ETFs have already surpassed 4 million coins. These holders are generally considered less likely to sell based on short-term price swings. As the share of long-term holders increases, selling pressure may ease, potentially creating a structural upward bias in prices.

Taking these factors together, it is considered realistic to include Bitcoin as a portion of a portfolio rather than allocating everything to it. For general investors, an allocation of up to around 5% of total assets has been suggested as a level of risk that may be tolerable.

Nevertheless, Bitcoin is still clearly a highly volatile asset. While it offers advantages in terms of inflation hedging, market representation, and accessibility, the emphasis should be on long-term structural changes rather than expectations of short-term price movements.

*Disclaimer: This article is for investment reference only, and no responsibility is taken for investment losses based on it. The content should be interpreted solely for informational purposes.*

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