The Benzinga Future of Digital Assets conference recently provided industry leaders with a platform to discuss Bitcoin’s evolving role in investment portfolios. A panel moderated by angel investor Erik LaPaglia explored how Bitcoin is transitioning from a speculative asset to a mainstay in institutional and retail investment strategies.

Increasing Allocations to Bitcoin

Zach Pandl, managing director of research at Grayscale Investments, highlighted the gradual adoption of Bitcoin in portfolios.

“Bitcoin used to be 0%… now it’s starting to crack into kind of 1%-2% for people,” he said, referencing its growing inclusion among investors. Pandl further predicted that allocations could eventually normalize at around 5%, driven by macroeconomic factors such as inflation and government debt.

Paul Cappelli, head of ETF strategies at Galaxy Digital, added that Bitcoin has become a reliable tool for portfolio diversification.

“It’s got a pretty long track record as a diversifier now in a portfolio,” he noted, citing its use as an inflation hedge and appeal to high-net-worth and institutional clients. Some investors, Cappelli explained, have even allocated as much as 10% of their portfolios to Bitcoin, reflecting its increasing legitimacy in financial markets.

Dominance in the Digital Asset Market

The discussion also addressed Bitcoin’s current dominance in the crypto space. Robert Mitchnick, head of digital assets at BlackRock, emphasized the asset’s unique standing compared to other cryptocurrencies.

“Bitcoin… has just a total step-change different level of resonance with a lot of our investor base,” he said, noting that its status as a “digital gold” differentiates it from other crypto assets.

Mitchnick pointed out that while other projects within the cryptocurrency market hold promise, Bitcoin remains in its own category. This distinction, he argued, is partly why Bitcoin has maintained its dominance and continues to attract institutional capital.

The Impact of Disruptive Events

The panelists also discussed how geopolitical instability and fiscal crises could drive further adoption of Bitcoin. Mitchnick outlined scenarios where Bitcoin could outperform traditional markets during economic disruption.

“Events like geopolitical destabilization or another surge in inflation could shift the conversation from ‘is this too risky?’ to ‘is it risky not to own any?'” he explained.

Pandl echoed this sentiment, stating Bitcoin’s appeal lies in its ability to hedge against traditional market risks. “People just need to look around at the world and see what is going on,” he said, referencing rising debt levels and fiscal challenges as key factors driving interest in Bitcoin.

Looking Ahead

As Bitcoin continues its journey toward mainstream adoption, its role in diversified portfolios is becoming increasingly prominent. The panelists agreed that education, regulatory clarity and focusing on its long-term value proposition will be critical in sustaining this momentum.

Cappelli summarized the sentiment, saying, “We’re living now in a world where Bitcoin is becoming part of every portfolio. There’s an excellent case for why you should be holding it.”

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