"Korbit Research Recommends 73% Bitcoin, 27% Ether for Optimal Institutional Portfolio"

# Updated Crypto Asset Allocation Strategy by Korbit Research for Institutional Investors Unveiled Korbit Research Center, part of South Korean crypto exchange Korbit, has unveiled its recent report, "Crypto Asset Allocation Strategy 2.0 for Institutional Investors,” released on October 24. This latest edition follows the initial report from February 2022, incorporating updates that reflect contemporary market developments and regulatory shifts in the cryptocurrency sector. The report positions Ethereum (ETH) as a critical asset for portfolio diversification for institutional investors. Ethereum is no longer merely a store of value; it is described as a versatile asset offering multiple benefits. These include fees-based consumption, staking rewards, use as collateral in decentralized finance (DeFi), and enhanced liquidity and security through restaking. The analysis underscores Ethereum's emerging role as a pillar of web3-based digital financial infrastructure. # Enhancing Traditional Portfolios with Bitcoin and Ethereum The report explores the advantages of incorporating Bitcoin (BTC) and Ethereum into conventional portfolios, such as the classic 60:40 stock-to-bond ratio. Adding up to 8% of these digital assets significantly boosts portfolio performance, with the Sharpe ratio climbing from 0.87 to 1.74. This illustrates that BTC and ETH offer independent risk premiums with low correlations to traditional assets, making them strategic investments rather than high-risk options. While the inclusion of cryptocurrencies does result in slightly higher maximum drawdowns, the report suggests that a quarterly rebalancing approach can effectively manage risks and maximize potential returns. “Investing in Ethereum is more than a simple financial move; it's a strategic decision toward the future of digital finance,” stated Yoon-Young Choi, head of Korbit Research Center. “By strategically allocating Bitcoin and Ethereum, institutional portfolios can achieve higher expected returns relative to risk, adopting a forward-thinking investment strategy.” # Ideal Allocation: 73% Bitcoin and 27% Ethereum The report further examines optimal allocation strategies within crypto portfolios. It concludes that a 73% Bitcoin and 27% Ethereum composition achieves the highest Sharpe ratio of 1.49, outperforming portfolios solely of Bitcoin (1.28) or Ethereum (0.92). Even a 50:50 split between BTC and ETH attains a Sharpe ratio of 1.43, highlighting the value of diversification. Korbit Research emphasized Ethereum’s unique strategic significance in maintaining a smart contract-based infrastructure, effectively complementing Bitcoin's market role. “Institutional investors should perceive Ethereum not just as a speculative asset but as an essential component of financial systems,” the report stated. By offering data-driven insights, the report highlights the potential of cryptocurrencies to transition from niche investments to vital elements of institutional portfolios, signaling a paradigm shift in asset allocation strategies.