Who needs Bitcoin asset allocation?

Bitcoin, this unique currency experiment, has been up and down in huge social controversy for seven years since its launch. Every year, there is a period of time when it reappears in people's sight, making people exclaim that it still exists and even gets better and better. It is full of idealists and crowded with speculators with a keen sense of smell. They gather around the two ends of the Bitcoin market curve, spying on long-term trends or short-term fluctuations. In the early days of Bitcoin, it was always called the counterattack fantasy of losers, but recent observations show that more and more high-net-worth individuals have begun to favor Bitcoin investment. Among them, the charm of Bitcoin seems to be by no means limited to the judgment of early commentators. Bitcoin not only has strong circulation properties and low investment thresholds, but also, under the current global economic downturn and the expectation of loose legal currency policy, the market risk preference has gradually raised its valuation.

In our previous article "Why You Can't Make Money on Bitcoin", we have come to the following conclusions: lowering your income expectations, clarifying your tolerance for fluctuations, controlling the net value fluctuations of assets in Bitcoin within your psychological tolerance, insisting on fixed investments, and obtaining long-term stable returns are effective rules for making money on Bitcoin. In this article, we will explore who needs to allocate some Bitcoin assets in the current social context?

Before we discuss this issue, we need to first understand what asset allocation is: asset allocation is a financial management concept. Investors allocate investment funds between different asset categories according to the time limit of their investment plan and the risk they can bear. They usually allocate between low-risk, low-yield assets and high-risk, high-yield assets. Bitcoin, as one of the few investment products that domestic investors can participate in and is closely connected with the global market, is one of the high-quality global asset allocations . As we all know, the Bitcoin trading market is linked 24 hours a day. From Beijing to Tokyo, from London to New York, different markets around the world are trading all the time. The price of Bitcoin is closely related to the supply and demand relationship in the international market, including overall inventory, mining costs, and usage demand. As a safe-haven asset, the fluctuation of Bitcoin prices is closely related to the international political situation, policy trends, economic changes, and financial environment. Therefore, when choosing Bitcoin in family asset allocation, it is necessary to look at it from a global perspective, and the timing of intervention should also consider more relevant international information. At the same time, when trying to allocate Bitcoin assets, we also need to be aware that compared with traditional financial assets, Bitcoin is still a new thing and has greater investment risks, and its proportion in asset allocation should not be too high.

So, who exactly needs Bitcoin asset allocation?

1. High net worth individuals who have diversified investment needs to allocate Bitcoin assets.

A person with long sleeves is good at dancing, and more money makes it easier to make money. Compared with ordinary people, high net worth individuals often have a brighter vision, are always one step ahead of others, have a broader vision, and a bigger picture. When ordinary investors are trapped in the domestic market, they have already laid out global asset allocations early. On this basis, they might as well pay attention to Bitcoin and the blockchain technology behind it, and use reasonable funds to allocate it. Regarding the reasonable allocation ratio, professional investor GT Zhou believes: "All high net worth individuals should exchange some Bitcoin for storage. As long as it does not exceed 5% of financial assets, the risk is completely controllable, but the return is not just monetary, but complete freedom. This is a great financial adventure, but it has nothing to do with money. One more Bitcoin, one more freedom, I believe in haobtc."

2. Blockchain enthusiasts need to allocate Bitcoin assets.

According to available information, in 2015, China Wanxiang Holdings Co., Ltd. established China's first professional blockchain technology institution, Wanxiang Blockchain Laboratory, and set up a $50 million fund dedicated to investing in blockchain application technology projects with commercial prospects, which is used to invest in various projects related to blockchain commercial applications worldwide. In August 2016, LeTV Financial Blockchain Laboratory was announced to be established under the promotion of LeTV Financial President Wang Yongli. Blockchain has become a trend at present. There is no doubt that Bitcoin is the most reliable blockchain asset at present. To be optimistic about blockchain is to be optimistic about Bitcoin assets. Why is Bitcoin the most reliable blockchain asset? Wu Guanggeng, co-founder and COO of haobtc.com, has elaborated in detail in his article "Bitcoin: The Best Blockchain Application", which is not mentioned here.

3. People who have overseas remittances or business dealings need to allocate Bitcoin assets.

According to a report by Forbes, Bitcoin is becoming an important option in the global remittance market. The existing financial infrastructure is still in the pre-Internet era, which hinders the efficient circulation of money around the world. The transfer of funds from one country to another is slow and inefficient. Bitcoin not only reduces the cost of the international remittance market, but also increases the speed. In addition, the price fluctuation of Bitcoin has stabilized. According to the research of Coin Trend, Bitcoin fluctuated by an average of 5.1% per day in 2014, 5.0% per day in 2015, and 3.6% per day in the first half of 2016. Compared with the fluctuations of 30% to 50% in recent years in the legal currencies of some small countries, Bitcoin is one of the options for people who run their own businesses overseas to transfer assets stably.

4. Can’t other people allocate Bitcoin assets?

High net worth individuals must be the mainstay of global asset allocation, but that does not mean that the working class does not have the ability and need to do so. The domestic P2P industry is in chaos, with frequent runaway incidents, and the safety of funds cannot be effectively guaranteed. If placed in a bank, the annual interest rate for fixed deposits is 1.75%, and the annualized return on investment in money market funds is 2.4%. The M2 growth rate during the same period is 12%, and the net loss of the money in hand is about 10% per year. If you invest part of your funds in various global assets, you can effectively ensure the safety of your funds and effectively offset the losses caused by the depreciation of the RMB. Of course, compared with high net worth individuals, the working class faces restrictions on the size of the investment threshold. Bitcoin, as a high-quality global asset allocation that can be invested in with 100 RMB, can be said to be tailor-made for them.