The world experienced a rare paradigm shift in technology usage when the Internet became available to the general population in the mid-1990s. This, in turn, led to the convergence of several remarkable technologies, such as the development and use of big data, artificial intelligence and software-driven task automation. The emergence of a cryptographically secure digital asset therefore comes as no surprise. Nor does that fact that, just like the internet in its early days, it suffers considerable confusion as to its value and usage potential.
Bitcoin’s lifespan now straddles two economic crises and stems from the need for an independent digital store of value. Its arrival at the global investment stage comes at a time when investors are facing considerable valuation challenges in traditional asset classes, while seeing few diversifying benefits from existing alternative investments.
While Bitcoin has some growth exposure due to growth in the broader technology sector, we believe it is relatively insulated from economic cycles. We also find that in the context of a portfolio, it behaves in a similar manner to other alternative assets in providing diversification, with the exception that its portfolio diversification benefits are far greater than its competitors.