Optimize your Portfolio’s Diversification utilizing Cryptocurrencies
I see Bitcoin as another means to store a percentage of your overall portfolio allocation balance. Meaning, if you have several blocks of $10,000s (tens of thousands USD) as sideline capital, consider holding a few hundred dollars or up to even a thousand dollars , dare I say a few tens of thousands of dollars worth as your bit coin holding. This allocation percentage ultimately rests on you to determine based on factors such as risk tolerance, objectives and needs, and many others. It’s obviously subject to currency risk as bit coin’s price to the USD is volatile, so use your best judgement when evaluating the situation.
Look I’m not saying the price of a BTC will double, triple, quadruple, overnight, it could just as sooner even pull back significantly, or remain relatively unchanged in price at current levels. Anticipating future price movements well, that is speculation. But get used to the idea, no matter who you are, of diversifying your holdings in a spectrum of asset classes. The major ones being cash and cash equivalents, fixed income bond securities(government, municipal, corporate), corporate stock equities, balanced index/mutual/exchange traded funds/hedge funds which are made up of a vast assortment of all of these, physical commercial & residential real estate ownership, physical precious metals, commodities, private business ownership interests, royalty /licensing rights, as the major go to asset classes.
The premise of this article is of the opinion that crypto currencies with the major one currently being bitcoin are another efficient store of value to keep your prized money denominated in, just as good as any other, like the major ones just listed above. Crypto currencies are a new emerging asset class, as the others as a way to store you dollar holdings in. It’s ease of use allows you to quickly conduct transactions as well as having the property of high liquidity allowing the user to convert back to US Dollars just as swiftly when needed. As always be sure to check in with your accountant for tax consequences for any capital gains incurred.