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Mike McGlone, a senior Bloomberg analyst, said digital assets have underperformed the Nasdaq index on a risk-adjusted basis over the past decade and described them as a failed asset from a portfolio and risk-management perspective.
According to a Bloomberg report, the MarketVector Digital Assets 100 Index, or MVDA, has shown about three times the volatility of the Nasdaq-100 Index, or NDX, since 2017, but its relative returns have remained largely flat. While higher volatility can generally be offset by portfolio diversification through a negative correlation with stocks, digital assets have maintained a positive correlation with equities and therefore have offered little practical benefit for risk management, the report said.
The MVDA index, which has a roughly 67% weighting in Bitcoin, has not outperformed the Nasdaq since crypto entered the regulatory fold with the launch of CBOE and CME Bitcoin futures in 2017. McGlone added that major bullish catalysts, including approval of spot Bitcoin ETFs and the Donald Trump administration’s pro-crypto policy stance, have already been mostly priced in, making it difficult for digital assets to generate uniquely strong excess returns over traditional assets going forward.