How Much Bitcoin Should You Actually Own?

between can become a very good store of value for our society over time. I don't think it is a good store of value right now. It's not a it's not a safe haven. You should size it so you can hold through an 80% draw down without selling. Samir is chief investment officer over at Hashtex where he oversees global investment strategy product development and research. He's a founding member of the firm and he has led the buildout of Hashex's crypto asset management platform across ETFs, ETPs, and other vehicles. So, an absolutely great guest to have on to give you guys the insight on the sort of non retail world, let's say, of crypto. Now, I want to ask you this to start off with, smear, you've consistently emphasized diversified crypto indexes over single asset bets. Why do you still believe a rules-based market cap weighted approach, kind of like a NASDAQ for crypto index is superior to most portfolios, especially with all the volatility and the narrative shifts? I mean, how can you build crypto NASDAQ when things go fall off so quickly? Narratives change so quickly. Yes, that's that's exactly the challenge that like we we've been faced like since 2018 when when we decided to build hashtag. So we we try to solve this using the same approach that the market has uh solved for equities over the last 50 years which is creating a very strong and solid rules based approach uh through an index. And if you think about it, it's very hard to pick winners in any asset class. And for crypto, since it's very early and emerging technology is even harder. So the the the approach that we have at Hashtax is to especially remember like we're talking about here like our clients are normally institutional investors or uh financial advisors. They're not focused in crypto. They don't have time to you know look at all the different projects and all the different you know opportunities in crypto. So what we bring for them is a simple way to get a broad exposure to the space without having to pick the winners. So the index will adapt over time. We rebalance and reconstitute over time to adjust to adjust to whatever the market is and it's it's market cap weighted. So this means that you know it's heavily tilted towards Bitcoin uh because it's by far the largest uh crypto asset like a broad exposure to the space to include a small sleeve of crypto in the portfolio without having to pick the winners. Um this is this has been the preferred approach for this type of investor. >> I've always kind of said to people if you don't have any time in crypto you don't have any time to spend you know doing all the stuff that I do and a lot of the sort of you know people who are really into crypto do then just buy like Bitcoin Ethereum maybe Salana and get some ETFs and forget about it. You don't need to do very much beyond that. And it's interesting >> that's exactly it. So just buy an index. >> Hey before we move on look I know how you feel. You got the chart on one screen you got the news on another. Well that is why we built the inner circle compass. that puts it all in one place for you. Sentiment somewhere else and by the time you've pieced it all together, the move already happened. Structural maps, trends, flip zones, live signals, and my team and our private community where we do AMAs. We have trade of the day updates. This is the beating heart of the crypto community right here. Curated sentiment, raw news, an ondemand AI agent for any chart or contract that you drop into it. We even have a targets, stops, all of it. And you get Discord access means you get to come to talk to me every 12 hours. to get a detailed intelligence report trading bot that gives you entries. When you join the inner circle, you've replaced a dozen scattered sources with just one place where you can go to get the information that you need to get the intelligence you need to get the tools you need to start winning. So, stop assembling the picture. Just look at it. What are you waiting for? Lock it in. Act now. I'll see you in there. Link down below. 7day free trial. What are you waiting for? Lock it in. Act now. I'll see you in there. Uh, I wanted to ask you a question cuz you rebalanced the portfolio. So this is an interesting one for me. In your rebalancing, let's say in recent history, what is something that you've added into the index and what's something you've removed from your index? >> The most recently recent add addition to the index was uh hyperlquid. So it was included in this last reconstitution in September after it uh you know satisfied all the eligibility rules and the most important of them being you know having enough liquidity in US-based exchanges having institutional and and and like custody and exchange support and derivatives like having a strong derivatives uh market to support it. So it satisfied all the rules and was included in September. And in terms of like which assets were excluded, had Litecoin like a year or so ago was excluded for lack of market representation. Avalanche as well. But but I think the most interesting story is how the index is expanding in terms of number of constituents which says like how many assets do we need to have in an index in order to provide that level of market representation to buy the market. And when the index was launched, it had I think it had like four assets in the index and now it has nine assets on the index. So this means that the market that the institutional market for crypto assets has been expanding over the last five or six years that the weight on Bitcoin was more than 90%. So Bitcoin represented more than 90% of the index. Now it's 70%. This is still a very you know very very heavily tilted towards Bitcoin but that has uh reduced over time. >> Very interesting. Avalanche and Litecoin are out. It's It's interesting because we I'm let's say pessimistic on those two assets and there's, you know, nuances to those conversations, right? But it's interesting that those are two that were excluded. >> And again, L there's no judgment here in terms of the like the the merits of the project. This is a rules-based approach. So it needs to fit a certain type of I say that because sometimes people that think that you know that has any kind of merit or the hashtags decided this is completely ran by NASDAQ so it's completely independent from NASDAQ and it's completely rules based there's no judgment here >> but no Samir how could you sell Litecoin come on it's Bitcoin silver [laughter] haven't you heard so I want to talk about Bitcoin now so how has your view of Bitcoin's role evolved since Hash Dex's early days you have been in the market for a long time, right? Do you still see this primarily as the store of value, the digital gold? I mean, Ray Dallio came out and said that Bitcoin's failed as a digital gold store of value, or has the thesis kind of moved beyond that? I mean, what what what are you guys thinking? What are those conversations like with the institutional investment crowd around Bitcoin right now? our approach to Bitcoin, especially as we describe the te the te the te the te the te the te the te the te the te the te the teases for those investors that you know tend to be very skeptical about the digital gold narrative or or this magic internet money that they don't understand why this has value is we try to position this as like an emerging digital store of value what does it mean it it means that you know crypto has some characteristics and bitcoin specifically has some characteristics that makes it it can be used as an interesting store value is a scarce asset has a very uh deterministic inflation curve so supply uh uh curve so no one can change that uh no central bank can change how many you know bitcoins are mined every 10 minutes and it's very hard you know to to defraud or or to you know double spend or anything like that so it has those characteristics makes it a very interesting store of value but it's the first time in our society that we have this concept of scarcity in the digital realm right uh and which is like very new to our society. So investors are still trying to wrap their minds around this and then most importantly l as the generational shift happens as you know the younger generation that has grown used to digital they're used to the concept of digital assets they're going to be in decision make making positions in a few years they're going to inherit a lot of money and I think this type of generational shift causes those uh changes in preferences so the way we see this is bitcoin is almost like an option on a digital gold bitcoin can become become a very good store of value for our society over time. I don't think it is a good store of value right now. It's not a it's not a safe haven. It's not going to protect you from, you know, short-term, you know, crisis uh in the market. But over time, Bitcoin can become a good store of value for our society. So our thesis is that this is the biggest investment opportunity because this means that you know if Bitcoin becomes a good store of value its volatility will keep going down over the coming years just like it has happened over the last few years and its value is going up more than other store of value alternatives. So Bitcoin sits kind of like in the middle because it has a store of value thesis but it's a risk asset. We cannot see, we cannot, you know, especially as we talk with institutional investors, we cannot frame this as a as a safe haven, as something that's low risk. No, Bitcoin is highly volatile and I think this volatility is is going down over time as Bitcoin consolidates as a store of value. >> I want to get your hot take on something. Uh, I don't know if you saw this today. It's the video is kind of going viral currently if it's from Marathon Fusion. They transmuted a nanog of mercury into a nanog of gold. No, this is the second time it's happened because the guys at CERN did it sometime early this year or late last year and they did a [clears throat] single atom of, you know, lead into gold. >> Yeah. >> This is the zero to one moment. You know, they used to literally write about the philosopher stone and all these things and, you know, ancient texts and now we're actually doing it with science. So, what's your hot take on this situation? How does this relate to what's going to happen to the gold markets moving forward and how does that relate to Bitcoin? This is a like a a fascinating technology breakthrough. Those things are only going to accelerate over the coming years. It's interesting if you think about, you know, like how the narrative has been around Bitcoin, Bitcoin's risk of being disrupted by quantum computing and now we see, you know, transmutation happening with fusion and and perhaps, you know, gold not becoming as scarc as it as it has been over the last few thousand years. I think [laughter] it's it's it's kind of like a fascinating story on how this market is going to change over time and how we can't predict the future, right? Like so so diamonds were very scarse and were very, you know, valuable until we find found a way to synthesize diamonds and now they're not like a store of value as they used to be before. Is that going to happen with gold? I think it's too early to tell. But this type of breakthrough uh gives us the, you know, kind of like it starts putting this into the map of institutional investors. Hey, like this thing here is a good store of value right now, but in the future it might not be. And then when that happens, what are you going to do? Are we going to, you know, move to, you know, other, you know, more minerals like if if Bitcoin can be if if gold can be uh synthesized that any other mineral can be synthesized, >> you kind of like have to move to to digital scarcity. So, I think this this can be extremely bullish to Bitcoin. I think it's too early but you know if we start to see this breakthrough accelerating and and and that becoming a reality it's going to be very significant breakthrough and and and and stay t for for Bitcoin adoption. The interesting thing about this is that you know as the demand for scarce assets increase in our society because the US will keep monetizing its death right so people are still like they're going to look for ways to diversify away from the treasury market the prices of Bitcoin and gold are going up and as prices of gold go up the break even or or the opportunity of synthesizing gold becomes more achievable right because right now like you said it's very expensive to synthesize gold but if gold's go to like from you three to $5,000 to $30,000 uh announce then like it might be worth it to synthesize gold. So the the more demand for scarce assets in our society the more people are going to invest in new ways to extract new gold and generate gold. >> You know that the stable coin thing is so fascinating because if you go back to the early days of Bitcoin I don't think the Bitcoiners were thinking that the killer use case for crypto technology was going to be sending dollars across the internet. But here we are. And you wrote in your article that a central point in the two sides of the dollar is that ddollarization is occurring in central bank vaults. Well, dollarization via stable coins is happening in emerging market pockets. And so how do you see these two forces interacting over the next like let's say 5 to 10 years? And what's going to benefit most? Is it just going to be the smart contract layers? Is it going to be like equity and circle or something something else? Maybe >> I have the privilege of of working on a global asset manager and getting to travel and speak with different investors in different countries. And one thing that you know it's very interesting for me as an insight is when I go to the US people are very concerned about how the US will keep monetizing this dab the tra trajectory of the the depth and and and and almost like a need to diversify away from T bills right uh so this dollar uh debasement trade it's been a significant topic of conversations over the the you know few few months especially last year or so uh in US and and and some pockets in Europe as well. They're seeing, you know, they they need to reduce their dependence on the US dollar, etc. So, they're moving to gold and and then Bitcoin is well positioned for that as well as an alternative. But when we go to emerging markets Brazil Argentina Mexico like and Latan, which is where I spend most of my time, it's not like they are they're getting away from the dollar. They're diversifying away from their local currencies. Uh and in countries that have capital controls because they try they try to keep the the the the money anyhow right within the economy. Uh those countries they normally try to impose some levels of of capital controls uh to avoid you know people just buying dollars without any kind of limits and stable coin has become just this easy way to get access to the dollar in emerging markets. If you look at all the big banks in Brazil they are they are using stable coins for crossber settlement right now. So it's not just retail anymore. Uh this is coming also to financial institutions uh in the emerging market. So I think this is a significant story about you know how yes like the the the basement trade is real and I think we should diversify. It's not like I don't think it has a high probability of you know the dollar you know losing its position as a store of value. But you should diversify. You should have you should own some gold and some uh uh bitcoin in your portfolio. But in emerging markets, they're buying uh stable coin like crazy. And that stable coin now with the Genius Act, those stable coins are required to be onetoone backed by short-term US Treasury bills. And this is going to grow demand for T bill. So the the the point that I'm making the article is that while the central banks are consistently selling US treasuries to buy gold, the individual investors and just people in emerging markets are buying US treasuries through stable coins. they're buying stable coins and the stable coin issuers are buying short-term US treasuries. So, this is kind of like creating a balance uh that can be helpful to America. >> Very interesting. Now, last question here for you. If you had to recommend a uh single strategic allocation range for most portfolios now to what percentage that when you talk to these family offices and stuff, these more conservative people, you know, we're not we're not getting these guys under the dog coins, right? But we're getting them into, you know, serious assets and and in a in a reasonable but meaningful allocation. And so what's that look like for those investors and you know maybe somebody who's sort of crypto curious how would they approach putting crypto in their portfolio as a reasonable percentage of it? I've been I mean I've been delving with this question for the last eight years since I've you know come professionally uh into crypto and I think it's a it's a very easy question to answer if you look at the numbers right if you run portfolio simulations and asset allocation uh simulations you can come up with a number but what I've realized over time is that the most important thing is and this is a very individual question but you should ask yourself you should size it so you can hold through an 80% draw down without selling. Right? So that's the size and and that it really depends on your on your risk profile. Some people might hold more might be able to you know have more resilience to to see you know prices going down 80% open you know the newspaper and TV and X and see that Bitcoin is going to zero and all those narratives that you know and and and resisting the urge to sell right so so I think that's the most important point you should size it to to to the draw down to the worst case scenario and making sure that you can live through this because in the short term it's a bumpy ride right so prices can fluctuate significantly so that's what that's the approach that we have when we talk with financial advisors, when we talk with institutional investors is, you know, helping their clients, you know, go through this. And what we've been seeing for many portfolios is like a three to 5% strategic allocation to crypto rebalancing over time, right? To avoid this, you know, that 3% becoming 10% and then uh, you know, becoming enough of a a size that won't make you sleep at night. that has been a very successful uh strategy and we've been seeing you know financial advisors worldwide implementing this over the last eight years. So that's kind of like how we how we overall been seeing crypto being adopted in institutional portfolios is like a 3 to 5% sleeve as a strategic uh position. This is the type of size that for most of the portfolios you can you can sleep at night with uh 60 70 80% draw down. Um and and I think this is the the most important urge that that I make to investors is resist the behavioral biases, right? The the urge that we have to just buy it all when it's going up and just sell it all and it's going down. And and that discipline of having an allocation, having a strategy and implementing that over three, five, 10 years, it's more successful. So it's it's more efficient than you're trying to pick the market and and and and you know pick the peaks and the valleys. >> There you go. Awesome. This super interesting conversation. Thank you so much, guys. Again, all the links are down below. Go follow Samir over on X. Real quick, 100,000 traders already open up this newsletter before the market opens. Are you one of them? The Lark Davis newsletter delivers the trade of the day, the chart of the day, market moving alpha straight to your inbox before the moves happen, not after. Every week, 100,000 people get the trade idea before the crowd does. You could be one of those people for free or you can find out after it's already played out. No noise, no fluff, just the setups and information worth acting on. You already know what's coming. This is the only newsletter that you need to keep your finger on the pulse and turn insight into action. You can join our 100,000 weekly readers. Sign up for the Lark Davis newsletter now. 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