Bitwise Study: Bitcoin Improves 60/40 Portfolio Returns

Why it matters

The Bitwise analysis, which has been updated annually since 2018, found that adding a rebalanced 2.5% Bitcoin allocation to a 60/40 portfolio improved returns in 100% of all three-year periods analyzed through 2025. For shorter two-year periods, the same strategy resulted in outperformance 93% of the time. Beyond cumulative returns, the study also demonstrated enhanced risk-adjusted performance. The Sharpe ratio, a measure of return versus volatility, improved in 100% of the three-year periods with a 2.5% Bitcoin allocation. The median improvement to returns over these three-year windows was a significant 8.58 percentage points. This search for performance enhancers comes as the traditional 60/40 portfolio has shown limitations. In 2022, investors were hit by a rare simultaneous decline in both stocks and bonds, challenging the core diversification principle of the strategy that had been a staple since the 1950s. The diversification benefit hinges on Bitcoin's low correlation to traditional assets. A Fidelity study using data through March

Key numbers

• A study from Bitwise shows that adding Bitcoin to a traditional 60/40 stock and bond portfolio boosted returns in most 2-3 year periods.
• The Bitwise analysis, which has been updated annually since 2018, found that adding a rebalanced 2.5% Bitcoin allocation to a 60/40 portfolio improved returns in 100% of all three-year periods analyzed through 2025.
• For shorter two-year periods, the same strategy resulted in outperformance 93% of the time.
• The Sharpe ratio, a measure of return versus volatility, improved in 100% of the three-year periods with a 2.5% Bitcoin allocation.

Sources

• Bitwise shows
• The Bitwise analysis
• The Sharpe ratio, a measure
• This search for performance
• In 2022, investors were

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