Bitcoin as a Portfolio Diversification Tool: Insights from Leading Asset Managers

Katie Wood, CEO of investment firm Ark Invest, emphasized the role of Bitcoin in enhancing the efficiency of institutional investors’ portfolios. In her view, diversification through cryptocurrencies can become a key factor in achieving higher risk-adjusted returns, especially in the search for new growth sources.

Why Portfolio Diversification Includes Bitcoin

Wood’s main argument relies on Ark Invest’s data analysis, which shows a low correlation of Bitcoin with traditional asset classes. The research indicates that Bitcoin’s independent price movements allow for reducing overall portfolio risk without significantly decreasing potential returns.

The numbers are convincing: the correlation coefficient of Bitcoin with the S&P 500 index is only 0.28, while the index itself shows a correlation of 0.79 with real estate investment trusts. This means Bitcoin moves independently of key financial indicators, making it an attractive tool for creating a balanced portfolio.

Position of Major Financial Institutions

Wood is not alone in this opinion. Recently, leading global financial institutions have shifted from skepticism to practical recommendations for including cryptocurrencies in portfolios.

Morgan Stanley, one of the largest investment banks, recommended its global investment committee consider an “opportunistic” allocation of up to 4% of the portfolio in Bitcoin. Bank of America approved a similar approach, allowing its wealth management advisors to recommend clients allocate up to 4% of their assets to digital assets.

Brazil’s largest asset manager, Itaú Asset Management, suggested a small Bitcoin allocation as a hedge against currency fluctuations and market shocks. Analytical firm CF Benchmarks went further, positioning Bitcoin as a core component of a modern portfolio capable of increasing efficiency through better returns and improved diversification.

Opposing Views: The Shadow of Quantum Computing

However, not all experts are ready to support the growing trust in cryptocurrencies. Christopher Wood, an investment strategist at Jefferies, recently changed his stance dramatically. Previously, since late 2020, he actively recommended a 10% exposure to Bitcoin, but by early 2026, he completely withdrew this recommendation.

The reason for this change is the development of quantum computing. Wood fears that breakthroughs in this field could eventually compromise Bitcoin’s cryptographic security and undermine its attractiveness as a long-term store of value. Instead of Bitcoin, the strategist now recommends gold, traditionally considered a safe asset during crises.

Portfolio Diversification Outlook in 2026 and Beyond

Current market conditions indicate that Bitcoin is at a turning point. As of February 2026, the asset’s price is $78,550 with a fluctuation of -5.41% over the past 24 hours, confirming its volatility. However, Ark Invest believes this volatility is precisely what makes Bitcoin useful for portfolio diversification — its independent movements offset declines elsewhere.

Ark Invest’s long-term forecasts for Bitcoin remain ambitious, projecting a price increase by 2030-2035. These forecasts are based on the assumption that institutional adoption of cryptocurrencies will continue and technological risks will remain manageable.

The disagreement between Katie Wood and Christopher Wood reflects real dilemmas faced by portfolio managers. On one hand, diversification through Bitcoin offers objective benefits in reducing risk correlation. On the other hand, long-term technological threats require thorough analysis before making a decision.

For investors considering Bitcoin as a component of their diversification strategy, a balanced approach remains key: starting with conservative percentage allocations (3-4%), assessing one’s readiness for volatility, and continuously monitoring developments in quantum computing technology.