Bitcoin is finally coming of age, but should we be happy about that?

According to Jurrien Timmer of Fidelity, Bitcoin is maturing. This means that Bitcoin will experience fewer price fluctuations. Boring for us, but this could attract more financial institutions to invest in the digital currency.

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Fewer price fluctuations

Timmer explains that Bitcoin is already in a later phase of its adoption cycle. This means there is less volatility than older investors are used to. In a interview the macro analyst shared how he thinks Bitcoin will compare to gold and where it belongs in a traditional 60/40 investment portfolio.

The adoption of Bitcoin spot ETFs in January has made the digital currency more accessible to investors of all levels. This allows them to analyze Bitcoin alongside stocks, bonds and ETFs when building their portfolio and looking for an investment for a specific need.

“It’s an exponential version of gold,” Timmer said. He compares Bitcoin to other hard assets that perform well at low interest rates or during periods of fiscal uncertainty. While Bitcoin can rise in value against other assets and potentially take over their markets, Timmer says there will come a point where investors return to these cheaper assets.

Bitcoins in an investment portfolio

Timmer argues that a 2% allocation to Bitcoin could already make a difference for investors, given the digital currency’s high risk-adjusted returns. “It’s enough to count because of the return, but not so much that you want to sell everything if things go wrong,” he said.

Although Bitcoin is currently a “boom and bust” asset, Timmer predicts that Bitcoin will eventually “mature” into something more stable, similar to gold. This could encourage companies to buy more Bitcoin as they can use BTC instead of cash which should have a stable short-term value.

“Part of growing up means transcending those dynamics,” Timmer said. “As adults we no longer behave the way we did as teenagers… less volatility means fewer crashes, but also fewer extreme spikes, and that’s a good thing.”

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