The short answer is that there is no right answer. Each investor must evaluate how aggressive they want to be.
Factors that impact this decision may include:
- how much you can save
- your time horizon, and
- your willingness to bear risk that your crypto will decrease in value.
To illustrate this last point, a CFA Institute Research Foundation report suggested a 2.5% allocation to Bitcoin (between January 2014 and September 2020) improved returns from a traditional portfolio by nearly 24%. In this time frame, Bitcoin’s price grew 2,875%. However, if you had added the same amount of Bitcoin in December 2020, the impact through July 2022 would have been ~0%. Ultimately, past results are not guarantees of future performance.
