- A CNBC guest speaker said that people should invest 2% to 5% in Bitcoin
- The range is a modest allocation yet on an investment carrying a higher risk tolerance
- Bitcoin is notorious for its volatility — always approach with caution
Bitcoin Allocation Should be 2% to 5%
A CNBC guest speaker appeared in an interview Tuesday and discussed the Bitcoin market and what would make for a sane investment strategy. Given the volatile nature of the leading cryptocurrency, the speaker stayed aligned with expectations and urged people to approach the volatile digital asset cautiously.
To this end, he said that an allocation of between 2% and 5% of anyone’s net worth would be considered an appropriate amount to invest in Bitcoin. Is that a range that’s too high or too low? No one can really tell.
We Did the Math on It
A 2% to 5% allocation range of $10,000 in cash would assume an investment in Bitcoin of between $200 and $500. And if we go higher than that, the range changes substantially in nominal value when applied to $100,000 or even $1 million. To do the math, on a $100,000 account, this range would be equal to $2,000 and $5,000. And if we scale up to $1 million, it would fall within $20,000 and $50,000.
Now how does that translate to Bitcoin at current market prices? The least amount in the range, $200, would get you 0.003418 BTC, or a tiny fraction of the crypto coin. And the highest amount — $50,000 — would get you 0.8547 BTC based on today’s prices of $58,000 to $60,000 per Bitcoin.
What Is a Good Allocation?
Still, no one can tell what a good ratio is when investing in Bitcoin. If you are a high-risk taker, you might consider investing a more aggressive sum relative to your net worth. Just keep in mind that the crypto market is highly volatile and has outsized prices swings that may wash out entire fortunes.
With this said, what should you do with the rest of your net worth, or money available for investing? You may decide to look into traditional markets. Stocks, or shares of publicly traded companies, might be a good fit for you if you are not the risk type and prefer a more stable source of investments.
What’s the Latest in Crypto Space?
What’s happening in crypto land today? Bitcoin jumped in its third day of gains early Wednesday and is on track to seal a 10% increase since Monday’s low levels near $54,000. This morning, the OG crypto asset nearly hit $60,000 as bargain hunters went out to scoop up some Bitcoin that was floating at a four-month low.
The broader digital asset market also reacted to the upside today with the entire market cap gaining roughly 1.5% to cross $2.15 trillion. Of that amount, Bitcoin is proudly holding a market share of 53.8%, or $1.15 trillion.
Ethereum, the second-largest crypto coin, was changing hands at around $3,100 per token, up about 2% daily.
