With the right management strategy, bitcoin almost always boosts the value of a mixed portfolio, according to Bitwise research – even if bought at the all-time high.

Based on a test portfolio using historical data, the San Francisco-based asset manager found investors who allocated a small percentage of bitcoin to a portfolio made up of stocks and bonds would have made a notable increase to cumulative returns, even in the past three years.

Bitwise said in its Wednesday report – co-written by its head of research, Matt Hougan – that a 2.5% allocation of bitcoin in January 2014, rebalanced on a quarterly basis, would have boosted portfolio returns from 26% to almost 45% by March 31, 2020. A 5% allocation would have pretty much-doubled returns on a traditional portfolio to 65% over the same timeframe.

That’s not altogether surprising. After all, the price of bitcoin has moved from $750 to $6,500 over the past six years. Considering bitcoin was the best-performing asset of the last decade, investors would expect outsized returns for holding something that saw a price increase of 766%.

But what’s interesting is returns still increased, albeit marginally, even when bitcoin was allocated at the all-time high of $20,000 in December 2017 and continued to be held at the same portfolio weighting until March 31, even as the value dropped by some 66% to just under $6,500.

On the same timeframe, and assuming quarterly rebalancing, an allocation of 2.5% or 5% contributed returns of either 0.05% or 0.40% to a portfolio of 60% world equity and 40% bonds. Without any bitcoin allocation, the value of the portfolio would have actually decreased by 0.54%; more than a 1% bitcoin allocation would lead to a 0.51% drop in a portfolio’s overall value.

In its report, Bitwise explains these seemingly paradoxical results stem from the nature of bitcoin as an asset: it’s highly volatile, but largely uncorrelated to other assets.

See also: Bitwise Looks to Retail Market for Its Crypto Index Fund

This secret sauce makes it an ideal component for volatility harvesting – a wealth management strategy that only came about in 2012 – whereby rebalancing boosts returns by skimming value off the top of well-performing but volatile assets, such as bitcoin, and locking it into something more stable, like a blue-chip stock.

“Adding bitcoin to a diversified portfolio of stocks and bonds would have consistently and significantly increased both the cumulative and risk-adjusted returns of that portfolio over any meaningful time period in bitcoin’s history, provided a rebalancing strategy is in place,” the report reads.

There are some caveats. Bitwise stresses that it depends on a disciplined and consistent rebalancing strategy. Those who rebalanced too often suffered from lower returns, and those who just held and never rebalanced, significantly increased their downside risk.

Bitwise found that between 2014 and March 2020, with a 2.5% bitcoin allocation, a monthly rebalancing led to returns of only 38% and actually raised drawdowns to 22.3%; holding made returns of 42.1%, but came with drawdowns of 32%. An annual rebalancing presented the best of both worlds, with cumulative returns of 67% and maximum drawdowns of only 22.3%, all other things being equal.

The asset manager also said that piling too much bitcoin into a portfolio, say more than 5% allocation, actually raised volatility so drawdown risk would begin to outweigh potential gains.

See also: Cryptocurrencies Are Still the World’s Best Performing Asset Class This Year

Of course, the report works on the basis bitcoin will continue to show the same characteristics and same upside, going forward. Eliezer Ndinga, a research associate at Swiss-based crypto product provider 21Shares, told CoinDesk that market uncertainty could “potentially put on pause the adoption of cryptoassets from high-profile traditional financial institutions in the foreseeable future.”

But, he added, “the digital nature of cryptoassets with a finite and predictable supply uncorrelated to traditional monetary and fiscal policies with transportability that do not require social contact, have the chance to increasingly become an attractive asset.”

Whatever happens to bitcoin over the next six years, Bitwise’s report appears to provide a solid reason for bitcoin to be incorporated into the next generation of wealth management strategies.

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