How much of your portfolio should you allocate to Bitcoin to maximize your returns without taking on too much risk? Using the Kelly criterion, Stephen Perrenod, Ph.D., calculates the optimal Bitcoin allocation to be at least 75%. The Kelly formula helps you determine the optimal size of an investment, balancing the potential for growth with the risk of losing your capital. By calculating the proportion of your portfolio to invest based on the probability of success and expected returns, the Kelly Criterion allows you to maximize long-term growth while avoiding the trap of overexposure to a single source of risk. --------------------------------------------------------------------------------------- Book a free session with 21stCapital now: https://cal.com/21stcapital.com/introduction-call-bitguide --------------------------------------------------------------------------------------- 00:00 - Intro 01:54 - Stephen Perrenod's Background 02:32 - Main Kelly Criterion Explanation 09:04 - Derivation of the Kelly Criterion 10:57 - Bitcoin Allocation Results Using Kelly Criterion 16:22 - Kelly Criterion Applied to Weekly Bitcoin Data 19:16 - Kelly Criterion Equity Curves for Bitcoin (Spoiler: Don’t Trade!) 21:15 - Kelly Criterion Quarterly Bitcoin Holdings Analysis 22:14 - Quarterly Rebalancing Simulation Using Kelly Criterion for Bitcoin 23:19 - What If You Bought $10,000 Worth of Bitcoin at the Start of 2015? 27:04 - Bitcoin Equity Curves for Annual Decisions 28:17 - Continuous Distribution Kelly Formula 29:24 - Smoothed Kelly Criterion for Bitcoin 32:16 - Kelly Criterion Applied to MicroStrategy’s Bitcoin Allocation 35:18 - Bitcoin, Gold, or Nvidia? 40:02 - 100% Bitcoin Allocation 41:44 - Bitcoin Replaces Bonds: A Retirement Plan with Bitcoin --------------------------------------------------------------------------------------- https://21stcapital.com/