Multi-asset investors can assess bitcoin's compatibility with their portfolios by addressing three key questions regarding return expectations and portfolio volatility. Bitcoin’s price is mainly influenced by demand, underscored by its increasing integration into traditional financial markets. Innovations in accessibility, alongside regulatory approvals, have propelled its value. Bitcoin is emerging as a digital gold alternative, with expectations of significant growth potential, targeting a share of the $10 trillion market in private investments, central bank reserves, and industrial use. A strategic framework enables investors to adjust their portfolios effectively. For instance, if bitcoin is expected to outperform equities significantly, its allocation can increase from 0.58% to 5.77% in a well-structured portfolio, enhancing overall expected return. This adjustment illustrates how multi-asset investors can optimize their bitcoin allocations based on market projections and their financial goals.

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