Bitcoin just temporarily fell below $30,000 before recovering – here's what this means, the impact to brokerages, how to invest moving forward, and what I'm doing with my own portfolio – Enjoy! Add me on Instagram: GPStephan
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As of now – at the time I’m making this video, prices are down about 40% from the peak in April….which, SOUNDS PRETTY BAD if you’ve only been invested for the last 30 days…but, once you zoom out…you’ll still see that, this year alone, we’re up 30%…and YEAR OVER YEAR…it’s over 300% higher than it used to be.
In terms of my own thoughts on this, in the beginning of the year, I told everyone that I would place 1% of my entire portfolio into a 60/40 split between Bitcoin and Ethereum, because I would rather take that 1% risk and be in it, than NOT take the 1% risk and be out…and, so… I did just that.
All of this is just to say: I’m continuing to buy into Bitcoin just like I would any stock, I’ve taken this as an opportunity to increase my position, and my goal is still – by the end of the year – to allocate 5% of my entire portfolio to 60/40 Bitcoin and Ethereum, regardless of where it’s trading at. This was a number that I’ve carefully thought about, it’s something that I’m prepared to risk, and this recent sell off makes no impact to my level of investment over the next few years.
The biggest concern that I see, is that TOO MANY people are viewing Bitcoin and Ethereum as their ticket to strike it rich…instead of using it as a SENSIBLE way to further diversify an already thorough portfolio, which – in my opinion – is what it should REALLY be used for right now.
Bitcoin and Ethereum should NOT be seen as a lottery ticket, or a “Get Rich Quick” opportunity that will one day be worth $500,000…because, the reality is, during a drop of 30-90%…those same people will most likely panic, sell, lose a LOT of money, and be discouraged from ever getting involved again. Being a GOOD investor is all about analyzing the risk, knowing the volatility, and understanding the importance of diversification so that a 50% drop doesn’t phase you, and you can continue moving on without emotion clouding your judgement.
I’ll take the stance today that, yes, you CAN safely invest in cryptocurrencies, they CAN be a part of a blossoming portfolio, and long term, I believe in them just as I would a stock…but, you SHOULDN’T go all in, it’s a BAD idea to invest more than you’re willing to lose, and during times like this – if you’re panicking over a drop – that’s a sign you’ve invested more than you’re comfortable with, and I would seriously consider dialing it back to an amount where you don’t lose sleep.
For me, that amount was 5% of my portfolio…and, if I see a 90% drop…sure, no one likes losing money…but, it wouldn’t affect my quality of life. It’s more important, instead, to craft a portfolio around as many different asset classes as possible so that – over the next few decades – you’re nearly guaranteed success, without the chance of losing everything through a series or poorly timed buy-ins.
So, long story short…yes, I think cryptocurrency can be a strong part of your portfolio, I wouldn’t be concerned about fluctuations in price, and I would expect to see a LOT more volatility in the coming few months…but, if you’ve invested more than you’re comfortable with, it might be worth diversifying and taking a more balanced approach, instead.
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