DAiM Issue 64 · October 2026

How Much Bitcoin Is Enough?

By DAiM · A monthly letter on bitcoin for families, advisors and institutions

Welcome to DAiM's Newsletter. Since 2018 we have been helping families build wealth with crypto. We have our clients to thank for being an award winning asset manager. Please enjoy our thoughts below.

"If broad adoption occurs, bitcoin could become less volatile and have a more stable low correlation with stocks."

BlackRock Investment Institute, December 2024

At a glance

1A Calmer Bitcoin

We measured bitcoin's annualized volatility for every calendar year since 2014. From 2014 through 2022 it averaged 73.5%. From 2023 through this year to date, it has averaged 45.7%. The decline is also visible in the latest rolling twelve-month estimate, 44.5%, below any reading between 2015 and 2022. Bitcoin is still more than twice as volatile as the Nasdaq this year (45.3% against 18.9%).

Measured from each cycle peak, each bear market has also been shallower than the one before: 92.7% in 2011, 84.5% in 2013-15, 83.8% in 2017-18 and 76.7% in 2021-22. Since the October 2025 closing high, the largest decline through October 4 was 53.1%, to the June 30 close. The ultimate low of this cycle is not yet known, and sharp falls inside a cycle still happen: the 2021 sell-off from April to July was just as deep.

Broader institutional participation may help explain the change, but these calculations do not establish its cause or whether it will persist.

2Client Question: "How much bitcoin should I own?"

This month, we revisit a question we hear often. If you have one you would like us to address, reply to this email.

A useful way to answer it is to size the position by the risk it adds, not by the dollars it takes. In December 2024, the BlackRock Investment Institute estimated that a 1% to 2% bitcoin allocation accounted for about 2% to 5% of a 60/40 portfolio's risk, and called 1% to 2% "a reasonable range for a multi-asset portfolio if investors believe it will become more widely adopted and can bear the risk of potentially rapid price plunges." It added that "allocations beyond 2% elevate portfolio risk disproportionately."

We applied BlackRock's framework to a different portfolio: US stocks and investment-grade US bonds, with dividends and interest, across several windows and return frequencies. Here, risk share means bitcoin's contribution to estimated portfolio volatility, based on historical returns and correlations. It does not measure a maximum loss.

A 2% position accounted for a median 4.5% of estimated volatility (2.5% to 6.7% depending on the method), a 5% position 13.6% (9.6% to 20.5%), and a 10% position 31.2% (26.8% to 43.8%). The share grows faster than the allocation because bitcoin is more volatile than the rest of the portfolio and partly correlated with stocks.

Volatility shares are abstract, so here is what a 50% fall in bitcoin would mean for the whole portfolio, on its own and alongside a 20% fall in stocks:

These are conditional calculations, not forecasts. They show why the loss an investor can accept, and what else the portfolio holds, belong in the conversation.

Our last issue opened with Ric Edelman's argument for a 10% to 40% allocation. Our calculations address a different question, how much bitcoin contributes to the volatility of a diversified portfolio, and do not identify an optimal allocation. That decision also depends on loss capacity, liquidity needs, other holdings and the role bitcoin is meant to play.

For us, the answer is never a single number. As we wrote in our last issue, we look beyond the digital asset portfolio itself to understand how it fits into a client's broader financial picture, including investment strategy, liquidity, taxes, retirement planning, and estate considerations. And as we said in August, if you already own bitcoin, "you need to check the percentage and ask yourself if you should be increasing."

3Keeping the Size You Chose

We tested a 60/40 portfolio that starts with 5% in bitcoin and is never rebalanced, starting on every trading day from January 2016 to October 2025 and reading the weight twelve months later.

Bitcoin's weight ended between 4% and 6% in only 14% of cases. The median was 7.3%. In 2024, a 5% position set on the first trading day ended the year at 8.6%; in 2025 it ended at 4.0%. These are historical illustrations from overlapping start dates, not probabilities. This is the "buy low, trim high" discipline we described in July, turned into a process.

For holders who have seen extraordinary appreciation, the conversation, as we put it in our last issue, "does not have to begin with 'Should I sell?'" It can start with how that wealth fits the life and financial plan a client wants to build. Keeping allocations on track across wallets and accounts, and coordinating the tax side across digital assets and traditional investments, including IRAs and trusts, is part of the service we provide.

4Washington and Wall Street

On September 15, the Senate voted 49-50 on cloture on the motion to proceed to the CLARITY Act, short of the 60 needed, with ethics provisions on officials' crypto holdings the sticking point. The Senate is in a scheduled state work period through November 6; a post-election session offers a possible window for another attempt.

The SEC proposed "Regulation Crypto Assets" on August 18. The CFTC submitted its own crypto rulemaking for White House review on September 17, and that review concluded on October 2: a procedural milestone, not a final rule. The timing and scope of final rules remain uncertain.

US spot bitcoin ETFs took in a net $2.65 billion in September, with inflows on 13 of 21 trading days. As we wrote in March, the cumulative trend matters more than any single day.

The Fed raised its target range by a quarter point on September 16, to 3.75% to 4%. The September jobs report then showed only 29,000 jobs added and unemployment at 4.2%.

5Price Forecast

Bitcoin closed October 4 at $86,521, up 49.7% from its July 1 intraday low of $57,800 and 30.7% below its October 6, 2025 closing high of $124,824. For the year, it is down 1.1%.

In our last issue we framed $100,000 as a year-end reference point: 15.6% above the October 4 close, and still about 21% below the intraday peak. Citigroup recently raised its 12-month target to $113,000 from $82,000. The calendar is a weak guide: since 2014, the fourth quarter has had bitcoin's highest median return (26.8%), but it was positive in only 7 of 12 years.

As we wrote in our last issue, we think the risk/reward at these levels is attractive. Looking further out, our internal base case for 2030, published in our last issue, is $290,000, about 235% above the October 4 close.

Risks to this view include the Mt. Gox repayment deadline of October 31, though the deadline does not determine how much bitcoin creditors will sell, or when, and a regulatory path that now runs through agency rulemaking.

On Our Calendar

• October 27-28: Federal Reserve meeting.
• October 31: Mt. Gox repayment deadline.
• November 3: US midterm elections.
• November 6: end of the Senate's state work period.
• December 8-9: Federal Reserve meeting, with updated projections.

Noteworthy

Bryan joined Market Movers: The Opening Bell on FinTech.TV on August 28 to discuss ETF inflows and whether bitcoin is moving from a bear market into a new cycle: Bitcoin Eyes $83K and $90K as ETF Inflows Continue.

This content is for educational purposes only and is not investment, tax, or legal advice. Allocation decisions depend on your objectives, risk tolerance, and time horizon. Contact DAiM.io to discuss a disciplined approach tailored to your situation. Over time, this discipline can support more efficient capital deployment and improve the likelihood of long-term wealth accumulation.