Miriam Cohen

Аннотация

This paper critically evaluates the role of Bitcoin in portfolio analysis, questioning its suitability as a tool for diversification and risk management. While Bitcoin has garnered attention for its potential high returns and its perceived ability to hedge against traditional financial risks, it remains highly volatile and speculative. Through quantitative analysis, including historical return analysis, volatility comparison, and portfolio simulations, we examine Bitcoin’s performance alongside traditional assets such as equities, bonds, and commodities. The results reveal that while Bitcoin offers high returns, its extreme volatility and unpredictable correlation with traditional assets significantly increase portfolio risk. Additionally, Bitcoin’s speculative nature undermines its potential for long- term diversification. The findings suggest that, contrary to popular belief, Bitcoin does not provide substantial benefits in portfolio diversification and may pose more harm than good for risk-averse investors seeking stable, long-term returns. Keywords: Bitcoin, Portfolio Analysis, Diversification, Volatility, Cryptocurrencies, Risk Management, Financial Assets, Investment Strategy, Speculation, Portfolio Optimization.