Bitcoin rose by over 9%, reaching a total worth of $50,000, CoinDesk reported on Monday, but financial experts are advising against investing heavily in the cryptocurrency.
Because Bitcoin is risky due to its price volatility, financial advisors say that it should make up less than 10% of an investor’s portfolio, according to Investor’s Business Daily. For Empyrion Wealth Management Kimberly Foss, however, crypto should make no more than 3% to 5% of assets.
“I am not actively recommending cryptocurrency,” she told the publication. “At this point, the market is too unproven, too unregulated and too prone to manipulation, both by actors with potentially nefarious motives and also by other forces that are at present not well understood.”
Unlike others, Sawchuk is more optimistic about cryptocurrency because large institutions are investing in Bitcoin and Ethereum and creating a “stabilizing force” as a result.
“I personally think 2% is the maximum I’m going with for clients until the dust settles and we figure out which coins are going to survive,” he told Investor’s Business Daily.
On the other hand, Paul Schatz, president of Heritage Capital and treasurer of the National Association of Active Investment Managers, said that the amount allocated to Bitcoin should be between zero percent and 10% based on an investor’s risk tolerance.