Crypto for beginners: what should you consider before you do any cryptocurrency trading? Brian Perry, CFP®, AIF®, Executive Vice President and Chief Investment Officer at Pure Financial Advisors outlines the crypto pros and cons. Using the five-year returns of Bitcoin to illustrate the excessively high volatility of digital currencies, Brian discusses whether cryptocurrency effectively functions as an inflation hedge, diversification tool, or cash, and how much exposure to the cryptocurrency market you might consider for your investment portfolio.
Takeaways for your cryptocurrency investing strategy:
- Position sizing matters
- Blockchain and decentralized finance (defi) are likely to have significant impacts in years to come
- Owning a single coin or token (even Bitcoin) may represent an overly concentrated position
- Pure prefers broad-based “shotgun” exposure to crypto, defi, and the blockchain, rather than a “rifle” approach
- Continue to monitor the crypto space for new products and vehicles that provide broad-based exposure to a wide range of cryptocurrency products
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