KEY POINTS
- The report says falling bond yields since 1981 and rising government debt weaken the case for a classic 60/40 portfolio.
- It backtests replacing part of the bond share with bitcoin, with quarterly rebalancing.
- It forecasts a price of roughly $250,000 to $840,000 per coin, using financial advisor adoption and an assumed market-impact multiplier.
- It describes 10% as its base case.
This report from River argues that the 60/40 stock-and-bond portfolio has lost some of its usefulness: bond yields fell for forty years after 1981, government debt has grown sharply, and both stocks and bonds fell during the 2022 inflation spike.
It then tests a portfolio where part of the bond allocation is replaced with bitcoin, in steps from 1% to 30%, and looks at the past decade, five years and three years. In its model, 10% bitcoin gives much higher ending value for a modest increase in the worst peak-to-trough loss.
The last section forecasts a bitcoin price. It estimates how many financial advisors might allocate and how much, converts that to net inflows, and assumes each dollar of inflow lifts bitcoin's total value by about three dollars. The result is a range of about $5.5 to $17.5 trillion, or roughly $250,000 to $840,000 per coin.
The report says it does not provide investment advice. Past results of any asset do not predict future ones.
Summary written by @parachutesBTC. The original belongs to River; read it for the full text, data and sources.