Bitcoin: An Asset Allocator Primer

Published on: January 28th, 2021

Bitcoin recently celebrated its twelfth birthday, but in historical terms, it is still very much in its infancy as compared to other major asset classes. In this paper, Joel Coverdale, CFA, of Eight Isle will outline how to think about bitcoin in the context of institutional money management, and specifically, in the context of the risk management process. He and his colleagues will posit that many of the characteristics of bitcoin are much like other assets, that it should not be treated that differently, and that from an asset allocation perspective, it provides some appealing benefits for a globally diversified investment strategy. The institutionalisation of bitcoin is gaining pace. This paper aims to add structure to that process and identify some key themes for those interested to begin allocating.


  • AB
    Amarildo B.
    25 February 2021 @ 10:54
    Bitcoin 🌷🌷 biggest Pyramid Scheme on the Planet 🌍.
    • Hv
      Hannah v.
      15 March 2021 @ 05:06
      I’m curious as to your age. How old are you? Or better yet, which generational grouping are you in?
    • GZ
      Grace Z.
      16 March 2021 @ 10:59
      This commonly held misperception about Bitcoin shows how early we still are in this space. In Feb 1995 Newsweek carried an article by Clifford Stoll (an astronomer) labelled Internet as a hype and questioned its place in the world’s future. With the benefit of hindsight we know how “insightful” that view was.
    • AD
      Andy D.
      23 March 2021 @ 18:16
      May I refer you to Lyn Alden's thorough analysis of why Bitcoin is absolutely not a ponzi scheme. If that doesn't convince, I expect nothing will. You don't work for the FT by any chance do you?
    • mp
      michael p.
      22 April 2021 @ 00:10
      I think you hit some nerves. Why are there nerves to even be hit? That is the question.
  • ag
    alexandre g.
    1 February 2021 @ 20:07
    Interesting article thanks! One question, if Bitcoin is akin to gold how do you explain the correlation between Bitcoin and gold in table 1 page 13 to be at the lowest (0.03) amongst all other assets. As hard money, one would expect common factors to drive gold and bitcoin such as fiat money supply for instance and thus one would expect some higher correlation between gold and bitcoin?
    • JC
      Joel C.
      2 February 2021 @ 02:58
      let me address that question with a couple of comments: The data itself doesn't lie > it is what it is... so if that's the case, we can make some assumptions about what's going on; either - the correlation isn't stable, so whilst the point-in-time correlation is 0.03, please keep in mind that's just an estimate based on the prior 2 years worth of data; it does move about quite a bit (but referring to the graph on page 13 actually you can see the correlation through time has actually been pretty close to zero for most of the time); or - whilst the 'story' of bitcoin and gold is a good one from a hard-money aspect etc, maybe the data is actually telling us that whilst it may be true, perhaps bitcoin has yet to actually take that role, and therefore doesn't behave in a similar fashion to gold (yet)... It's all about interpretation, so there's no right answer here. I would be inclined to think its more of the latter... that is bitcoin is still emerging. Many people still see if fulfilling different roles, for some it's about hard money, but for others its still about speculation and return only. Either way, the important point is it's low correlation across a range of assets... implying that it does fulfil a different function that can be beneficial in the portfolio context.
    • ag
      alexandre g.
      2 February 2021 @ 06:43
      Thanks Joel, I would go for the latter too.
  • DM
    David M.
    1 February 2021 @ 16:48
    Good paper and super helpful. More like this please RV!
  • OL
    Otto L.
    31 January 2021 @ 17:51
    Great perspective and analysis, thanks. Would be good for Joel and Mark Yusko to discuss on RV. #GetOffZero
  • NR
    Niels R.
    31 January 2021 @ 15:20
    Interesting article as a 101. Thank you for providing Joel, Raoul and the other members.
  • MJ
    Marius J.
    31 January 2021 @ 12:05
    Thanks for papers like this! Super useful to get more.
  • JG
    Jonnie G.
    31 January 2021 @ 11:11
    Thanks for this. Once again, love reading these papers.
  • JR
    Jake R.
    30 January 2021 @ 23:04
    Thanks for this guys! The risk model part was very interesting. Showing an asset allocator that BTC has the Risk profile of a small cap, but is completely uncorrelated.
  • LS
    L3O S.
    30 January 2021 @ 20:49
    Thanks Joel and the team, as always timely content in plainspeak with enough technical content to keep me actively learning. Putting this into perspective with Plan B's STF2 model has deepened my understanding of how to invest in BTC. Great work.
  • DF
    David F.
    30 January 2021 @ 16:01
    Wonderful. Did the FCA get given a link? Thank you once more.
  • RL
    R L.
    30 January 2021 @ 00:00
    @raoul, Dalio just put out a piece on Bitcoin and crypto. it would be super helpful for us normies to understand what he is saying in his note and how your thesis differs.
  • fa
    francisco a.
    29 January 2021 @ 22:09
    Thank you. Great work.
  • RM
    Ricardo M.
    29 January 2021 @ 20:44
    Well done, I really enjoyed to read this. I learned a lot!
  • AK
    Abdel K.
    29 January 2021 @ 00:02
    • AK
      Abdel K.
      29 January 2021 @ 16:43
      Great content 👌 team Real Vision 👏🏼
  • AA
    Andrew A.
    29 January 2021 @ 10:43
    I think this is a very important paper. I hope its circulated at Michael Saylor's upcoming Bitcoin Summit -
  • JB
    James B.
    29 January 2021 @ 10:02
    Well done on your white piper. Glad to see the excess Sharpe calculations. I’d love to know whether it remains superior on a sortino basis too.
  • RH
    Richard H.
    29 January 2021 @ 10:01
    Cool paper! I feel the 5% bitcoin diagram was to conservative. I would go 15-20 on a bare case haha. Anyways great job.
  • SG
    Soros G.
    29 January 2021 @ 03:09
    Apologies to all maximalists up front! Maybe I'm just triggered by the hype email that brought me here (and obviously I'm as ignorant as always): "This white paper is of _critical_importance_ for pension funds, endowments, insurance companies, and asset allocators of all types. And while it is targeted at those institutional players and their clients, we think it is relevant for all in the crypto and broader investing communities." It's a lovely piece of writing but little more than an executive review of the metric ton of free papers (and I imagine even larger quantities of even more detailed pitch material submitted to said institutions) from Grayscale, Galaxy, Pantera, Ark Invest, Kraken...etc. that were made available during 2020. I would hope institutions have the capacity (and willingness) to read broader research and hopefully can easily run this data internally! this paper aimed at the institutions or us retailers to further the fading "the institutions are coming!" narrative? Nevermind...just a thought.
    • JC
      Joel C.
      29 January 2021 @ 07:12
      thanks for the comments > as the author, what I would say is twofold; 1) don't assume that institutions have embraced this yet - yes they absolutely can/could run this type of analysis internally, but whether they are is another matter; more often what they need is an 'independent' take; 2) the genesis of writing it was really to help anyone understand a few simple truths about how bitcoin behaves in a broader investment framework. Whether a retail investor, or an institutional asset allocator, hopefully there is something in there that can add value and educate. I can honestly say there is no 'agenda' behind the piece.
  • AA
    ALLEN A.
    29 January 2021 @ 06:36
    So I've never actually read thru a paper of this type, but I love that it was super easy to understand, and for me illustrated that there is so much more to learn on risk, portfolio construction, and correlation.
  • TM
    Tim M.
    29 January 2021 @ 06:30
    Thanks for this informative piece. As a retail investor I have found the basics of this piece to be good building blocks for my own understanding. Keep up the good work. Tim M.
  • PS
    Patrik S.
    29 January 2021 @ 05:55
    Great job 👍
  • AA
    ALLEN A.
    29 January 2021 @ 01:19
  • EF
    Eduardo F.
    29 January 2021 @ 00:48
    Brave for your initiative :-) An important tool to finally help us speak the same language. My thanks to the entire Real Vision team.
  • JC
    Jey C.
    29 January 2021 @ 00:01
    This is and was what the financial sector needed all along.. from the smartest people in the room. Thank you RV!
  • WP
    Wayne P.
    28 January 2021 @ 23:56
    Fantastic information. Thanks guys!

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.

Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.