Tether, Bitcoin and how to revive the past 60/40 investment rule

In light of growing institutional interest and RoI at the time of Bitcoin’s 53.17% YTD release, it may be the right time to assess what comes after 60/40. Once the Wall Street Bulls mantra, 60/40 is now a passme strategy. Allocating 60% broadly to stocks and 40% to bonds secured relatively good returns with low-risk exposure in the 1980s and 1990s. Fast forward to 2020 and now, alternative investors are looking to Bitcoin to balance. the performance of portfolios affected by the Fed’s zero to negative interest rates and the unpredictability of global stock markets.

Despite the volatility associated with Bitcoin, your ROI has steadily increased year-over-year. The risk-reward ratio is low when the investment period is longer than a quarter, and this has been especially true since 2019. In fact, in January 2019, the price of BTC was $ 3,732, before it rose by 130 % to reach $ 8572 in June 2019..

It should also be noted that there were several opportunities to profit at 50%, 70-85% and 130%. Depending on the portfolio’s desired returns, managers could capitalize on the opportunity and exit based on their appetite for risk.

Source: CoinMarketCap

This year, the RoI of Bitcoin is perhaps a bit disappointing at 52%. However, prior to the recent crash in the price of BTC, there were profit booking opportunities from July 27, 2020 to September 3, 2020. This also coincided with the post-mid-cycle price rally of market. Having established that returns are lucrative for asset managers, what is the barrier to entry?

Buying cryptocurrencies with fiat currency such as USD is one of the main deterrents, as most fiat crypto exchanges charge a premium or high fees on entry and exit. The increasing popularity and market capitalization of USDT has addressed this challenge effectively. Only in the last 3 months, stable coins they have consistently added $ 100 million a day in market capitalization. In fact, the rise of stablecoins like USDT has been so powerful that it has risen to third place in the market cap rankings, behind only Bitcoin and Ethereum and way ahead of XRP.

With its supposedly transparent reserves, high market capitalization, and low transaction fees, Tether has made it easy for new players to enter fiat crypto markets / transfer funds via crypto exchanges. 2020, ergo, may truly be the year of Throws.

Tether provides liquidity and the opportunity to buy Bitcoin or altcoins at market value. However, it also provides a true hedge against inflation. It has become a replacement for the US dollar in countries like Russia and China.

Transferring USD across borders to invest in international business or products has a very high cost. However, Tether has removed the barriers and dramatically reduced the costs of cross-border transactions. Its adoption is boosting its market capitalization and its ease of access and availability is helping institutional investors save millions spent on fees and paid in premiums on exchanges globally.

Contrary to popular perception, relying entirely on the US dollar may not be the best move in times of uncertainty. Therefore, it is time to replace the traditional 60/40 with an optimized strategy in which at least 10% is invested in Bitcoin, which is held for a quarter or two. Bitcoin, alone, won’t either. Like teenage Bitcoin billionaire Eric Finman once said, “Invest 10% of your income in major cryptocurrencies.”

This 10% can be invested in the top 25 altcoins ranked by market capitalization, while another 10% can be held in Tether. Tether is the most important cog in this portfolio driving machine. During a bloodbath, traders have two options: pool assets in their portfolios as they race to the bottom, or convert them back to fiat on fiat-crypto exchanges and record losses.

However, stablecoins like USDT Give traders a third option: convert their crypto assets to Tether and HODLing through the bloodbath, thus avoiding losses and converting to USD with low fees and close to zero volatility.

Ergo, Tether could be the key to unlocking 60/40, while introducing a balanced basket of crypto assets to investor portfolios in 2020.

This is a machine translation of our English version.

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