Bitcoin – the right amount to hold in your investment portfolio
On December 15, 2017, one Bitcoin was worth approximately $ 20,000 at its first peak. A year later, on December 14, 2018, the price had dropped to $ 3,183. The price of the cryptocurrency King is now hovering at $ 57, 000.
Virtual money and the technology that underpins it, blockchain, are here to stay, which means they will both play a part in the lives of investors.
At CNBC, Sunayna Tuteja, TD Ameritrade’s head of digital business and distributed ledger (DLT) technology, said, “It’s actually quite difficult to divorce blockchain and bitcoin.”
What is the optimal number of Bitcoins to store in your wallet?
But how can you know how much Bitcoin to maintain in your portfolio for investing purposes?
There are two approaches that can be used. First and foremost, the proper allocation must be determined. Despite its volatility, this virtual currency has a low connection with other asset classes, like as stocks and bonds, which investors may hold in their portfolio.
As stated by Ric Edelman, founder of Edelman Financial Engines, an allocation of 1% in Bitcoin, from 60% in stocks and 40% in bonds to 59 percent in stocks, 1% in bitcoin, and 40% in bonds, could be enough to give investors the benefit of diversity without risking their entire portfolio.
“We must acknowledge that a 1% allocation will not have a major negative impact on a consumer.” It won’t stop them from reaching their financial goals, and it won’t hurt their own finances.”
Then you must comprehend the danger. Experts argue that a minor investment of Bitcoins in a portfolio does not free investors of the requirement to educate themselves before purchasing. They should first be educated on digital assets and blockchain technology.
“Don’t invest if you don’t grasp the technology; otherwise, you spend rather than invest.”
Investors considering entering the crypto market should do so with a long-term attitude and be prepared to weather periods of volatility, including the chance of a complete loss.