Allocations & considerations

Founder and CEO of Lake Avenue Financial, a California-based wealth management firm, Alex Chalekian has forged his path, deeply motivated by his family’s struggles with money management. Having experienced the challenges of pursuing the American Dream, he developed a strong desire to educate others on how to build better money habits. In partnership with CoinShares, he explains how Bitcoin can enhance a portfolio and support the pursuit of financial independence.

Allocating Bitcoin thoughtfully within a portfolio requires careful consideration of client goals and risk tolerance, Alex stresses. Given its high-risk profile, it is not suitable for all investors, and exposure should be funded from capital that can be lost without jeopardizing overall financial health. A conservative allocation, often between one and five percent, is recommended for most, ensuring participation in potential upside while limiting downside impact. Historical backtesting suggests that adding a modest Bitcoin allocation to a standard 60/40 portfolio can significantly increase returns; for example, a 4% quarterly-rebalanced position from 2017 to 2024 lifted annualized returns from 9.1% to 16.2%.¹

Advisors must decide which sleeve of the portfolio to reduce to make room for Bitcoin, whether from alternatives or equities, and regularly monitor and rebalance the position to maintain risk and allocation targets. The asset’s valuation is driven largely by supply and demand, sentiment, and adoption trends rather than traditional cash flow analysis, making ongoing oversight essential. 

Managing allocation is tricky but Alex Chalekian gives the keys to tackle this challenge. 

Key takeaways:

• Conservative allocations range from 1–5%, drawn from risk capital.

• Bitcoin can be slotted into the alternative asset sleeve or growth equity.

• Regular rebalancing is critical due to volatility.

• It may boost portfolio returns significantly, as past data show.

¹ Source: Bloomberg, CoinShares, data available as of close 06 May 2025. Data derived from a balanced 60/40 equity/bond portfolio, with an equal weight detraction to allocate to respective assets. S&P500, Bloomberg Total Return 7-10 year bond, XBTUSD, XBTETH, Gold, CoinShares Miners Index (internally calculated), CRB & Dow Jones Equity REIT indices are used. Rebalanced per calendar quarter.