Crypto Winter Over? Bitcoin's $85K Level Critical to Strong End of 2026

Schwab Network (0:00)

Wondering if the crypto winter is over. For more, we want to welcome in Tommaso Mancuso. He's the president and CIO of 3IQ, joining us here at the New York Stock Exchange. Tommaso, so let's start out the gate with that question. You know, we saw Bitcoin climb to the highest level of the year yesterday. We're pulling back a smidge today, barely. Is the crypto winter over?

Tommaso Mancuso (0:22)

We believe so. Last week was really interesting. We had two events that in theory should have taken Bitcoin down. We had the Fed hike, the first one since 2023, and we had the failure of passing the Clarity Act, and the initial reaction was Bitcoin down a bit. It just went to 75, 77K, and then went straight back up.

We went, he finished the week, last week up five, this week is already up 6 percent. If we can close the week above 85, I think we are in a good position.

Schwab Network (0:56)

Okay, so it's about levels that gives you the confidence, is that what gives you that?

Tommaso Mancuso (1:00)

That's right, that and also some on-chain activity that we are seeing, the interest that is breaking up. We also talked to a lot of institutions, so they're increasingly adopting digital asset and Bitcoin to begin with, as one of the assets in their asset allocation because of its properties.

We're also seeing a lot of interest around active strategies around digital assets.

Schwab Network (1:23)

Okay.

I'm glad you brought up institution, and I was curious to know what institutional flows look like. But let me ask you this about tokenization. It can be polarizing in the crypto community. What are your thoughts on that?

Tommaso Mancuso (1:36)

Tokenization is the dream, is the thing that everyone is waiting for. For now, it has underwent the expectation in terms of distribution adoption, but in time, it will happen.

And in fact, I suggest that we should see digital asset not as an asset class, but as a market place that is being developed in front of us. And as tokenization takes hold, we're going to see most assets being listed on the digital space.

Schwab Network (2:10)

Okay.

For retail investors, a good part of our audience is retail traders, retail investors. When they hear about institutions entering crypto, for some, they're excited about it because to them, it means the further adoption gives further credence. To some, it worries them and makes them concerned about accessibility. How should retail investors think about institutional adoption?

Tommaso Mancuso (2:37)

It's positive. It brings a steady hand to the asset.

I would really think that if you look at the properties of even just Bitcoin, and if you put it alongside a diversified portfolio, it improves the risk characteristics and the return characteristics of the portfolio. And that is because of the complexity of Bitcoin. It tends, the adoption tends to come in waves. So Bitcoin spends most of its time doing either nothing or losing a little bit of money, and then in a short amount of time, you get this burst of returns, and that is very positive for a portfolio. The key is to have the strength to hold through it, and as institutional adoption comes in, we are likely to see the Bitcoin volatility to come down a bit, and to have operators that are going to buy when the market goes down.

Schwab Network (3:31)

When you say diversified portfolio, are we talking about diversified crypto portfolio, or diversified portfolio of various asset classes?

Tommaso Mancuso (3:40)

60-40, for example, like a classic portfolio. If you put Bitcoin into an optimizer, you're going to find that it enhances the portfolio characteristics, and it's very hard to understand why, because crypto doesn't really behave like digital gold all the time as a tech, but the reason is because of its complexity.

Schwab Network (4:02)

And so, when you say diversified portfolio and for a time, there was a view that it operates as digital gold, but then it completely broke down that, or that narrative completely broke down. What percentage of a so-called classic portfolio of 60-40, many have said we're moving away from that. What percentage of a portfolio should crypto be, or what should the allocation be?

Tommaso Mancuso (4:30)

That's down to the individual preferences.

It's also down to the investment horizon. So, it's very hard to give a precise number.

Schwab Network (4:39)

Understood.

Tommaso Mancuso (4:40)

But one to three, up to five percent, is probably a good place to think about it. There are also ways through active management where you can reduce the volatility of Bitcoin, and that gives you more chance that you're going to be able to hold on your asset throughout the cycle.