👋 Hi crypto enthusiasts and fellow investors!
Recently I received an interesting question from a friend. She asked me: If I'm so bullish on Bitcoin and crypto, why haven't I invested all my money into it?
After all, while I've retained my holdings from 2017, 2020 and I also continued to accumulate last year. Some of you are already aware that my investment strategy tends to be a 40:60 split between crypto and traditional financial market investments. So, the pressing question is: Why not invest 80% or even 90% in Bitcoin, especially if the potential returns appear more lucrative compared to the traditional financial (TradFi) space?
Let me be clear: Going all-in would be sheer madness on my part!
Don’t get me wrong, I remain bullish on Bitcoin - extremely so. However, does anyone truly know what the future holds for it? I don’t, and I believe nobody really does. Here's why:
Uncertainty Surrounds Us: There are still ample scenarios where Bitcoin could crash. Consider a scandal involving Tether or a significant exchange hack.
The Unknown Unknowns: Events that no one can predict or see coming—often termed “Black Swan Events”—could linger on the horizon.
In essence, there's no such thing as a 100% sure bet in the world of investments.
Therefore, diversification plays an important role in your investment strategy. You will find these and other tips in this article.
This isn't to discourage any of you, nor to suggest everyone adopt my level of caution. How much should you invest in crypto? My answer: It depends.
Your investment in Bitcoin or any crypto should be predicated on:
Risk Tolerance: Are you comfortable with volatility?
Age: Investment strategies often differ based on life stage.
Investment Timeline: Are you looking at a short-term gamble or a long-term hold?
Loss Threshold: How much of a potential loss can you stomach without it affecting your quality of life?
Total Capital at Hand: How much money are we talking about? A grand or six figures?
If you're a young investor, unburdened by familial financial responsibilities, and can earn back your investment within a month, being a bit more aggressive with crypto might make sense. But if we’re discussing a six-figure sum that took years to amass... 80%? Not for me!
I'm keen to know your thoughts on this. How do you balance your portfolio? Let's keep the conversation going!
That’s it for today, I wish you all a nice weekend!
Cheers,
Stefan
Co-Founder CryptoExplorer
At first I was like 😳
But it makes sense! 🙏
I'm still building my portfolio so I can still buy more