With the launch of the new spot Bitcoin (CRYPTO: BTC) ETFs in January, there's now growing debate about just how much Bitcoin is prudent to hold in a well-diversified portfolio. Until this year, the consensus view had been that Bitcoin should account for only a tiny portion of your overall portfolio. As a general rule of thumb, 1% was the norm, and any percentage over 5% was considered ultra-aggressive.

However, according to Cathie Wood of Ark Invest, the optimal Bitcoin portfolio allocation might actually be closer to 19.4%. That's an incredibly high percentage, and it's worth a closer look at some of her underlying assumptions.

In Ark Invest's just-published "Big Ideas 2024" research report, the firm laid out the core building blocks of how it arrived at this figure of 19.4%. The starting point is thinking about Bitcoin as a stand-alone asset class with a unique risk-reward profile.

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Source Fool.com