Katherine Dowling from Bitwise Asset Management compared investing in cryptocurrency to adding cayenne pepper to a dish during a conference in West Palm Beach, Florida. She meant that just a small amount of crypto can make a big difference in an investment portfolio.
Ivory Johnson, a financial advisor and CNBC Council member, agrees with Dowling. He believes that because cryptocurrencies like Bitcoin are so up and down, investors should only need a little bit in their portfolios to see an impact. Johnson, who runs Delancey Wealth Management, suggests that having 2% to 3% of your investment in crypto is plenty.
Understanding Crypto’s Role in Your Portfolio
Johnson points out that cryptocurrencies are an “alternative investment,” different from traditional stocks, bonds, and cash. He explained that even a tiny bit of crypto could grow fast and balance out other slower-growing investments in your portfolio.
Investing in crypto depends a lot on how much risk someone can handle. Johnson mentioned that younger investors might go for a bigger slice of crypto, up to 5% to 7%, because they have time to bounce back from any losses. However, he cautioned against older investors putting too much into crypto due to the high risk of losing their retirement savings.
The unpredictability of crypto is well-known. Bitcoin, for example, reached an all-time high of over $73,000 before dropping below $69,000. Despite a rough 2022, Bitcoin’s value has significantly rebounded, showing its volatile nature.
The Highs and Lows of Investing in Crypto
The ease of investing in crypto improved with the introduction of bitcoin exchange-traded funds approved by the Securities and Exchange Commission. Johnson suggests buying a small amount over time and adjusting investments to keep the portfolio balanced.
A story of resilience came from Heather Ferguson, whose son lost $130,000 when the FTX crypto exchange collapsed. Later, he learned he would get his money back, which showed the unpredictable nature of investing in crypto.
The legal saga around Sam Bankman-Fried, the former executive of FTX found guilty of fraud, adds another layer of drama to the crypto world. His sentencing is under debate, with some arguing for leniency due to efforts to repay affected customers.
Bankman-Fried’s trial revealed deep issues within the crypto industry and sparked discussions about the impact of neurological conditions on behavior and decision-making. Letters from concerned parents, including those with children on the autism spectrum, highlighted these complexities.
Maria Centrella and Matt Kelly, both parents of children with autism, shared their perspectives, hoping to influence the sentencing by pointing out that those on the spectrum may process situations differently.
