{"id":423311,"date":"2022-03-29T18:01:00","date_gmt":"2022-03-29T15:01:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/"},"modified":"2022-03-29T18:01:00","modified_gmt":"2022-03-29T15:01:00","slug":"kitchen-table-bitcoin-how-should-average-investors-approach-crypto","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/","title":{"rendered":"# Kitchen table Bitcoin: How should average investors approach crypto?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2aa5d2b1b2a\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2aa5d2b1b2a\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/#%E2%80%9D_Kitchen_table_Bitcoin_How_should_average_investors_approach_crypto_%E2%80%9C\" >&#8221; Kitchen table Bitcoin: How should average investors approach crypto? &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/#Paying_yourself_first\" >Paying yourself first\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/#Crypto_funds_or_indexes\" >Crypto, funds or indexes?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\/#Crypto_investing_boils_down_to_risk_tolerance\" >Crypto investing boils down to risk tolerance<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Kitchen_table_Bitcoin_How_should_average_investors_approach_crypto_%E2%80%9C\"><\/span>&#8221; Kitchen table Bitcoin: How should average investors approach crypto? &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>Cryptocurrencies have come a long way over the last few years, so much so that their market capitalization is now above the $2 trillion mark, and large businesses including Tesla and MicroStrategy have invested billions in Bitcoin (BTC).<\/p>\n<p>While institutional investments in crypto assets have been growing over the last few years, discussion on how retail investors should <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach cryptocurrency investments has dominated <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social media<\/a>. While some advocate for all-or-nothing bets on small-cap altcoins, more conservative approaches include investing only in Bitcoin or gaining exposure via indexes.<\/p>\n<p>Younger generations are more prone to investing in cryptocurrency, with surveys showing that 83% of millennial millionaires now own crypto. But, what about those who aren\u2019t millionaires and are making average salaries? Should cryptocurrencies even be considered at all?<\/p>\n<p>Cointelegraph reached out to various experts to find out how they believe someone with an average American salary of between $45,000 to $50,000 a year should approach cryptocurrency investing.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Paying_yourself_first\"><\/span>Paying yourself first\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Traditional personal finance wisdom suggests that before creating a portfolio, investors should accumulate a few months\u2019 worth of living expenses in cash to prepare for a rainy day. How those funds should be saved varies depending on who\u2019s giving the advice, but one common theme is paying yourself first.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-03\/a77594d1-c195-498f-8988-4c0b59311317.jpeg\" alt=\"\" title=\"\"><figcaption style=\"text-align: center;\"><em>Former U.S. President Barack Obama Obama at a Missouri home in 2010. &#8220;Kitchen table issues\u201d is an American phrase that refers to taxes, investments, retirement and other everyday concerns. Source: Jewel Samad\/AFP\/Getty via <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/newrepublic.com\/article\/155997\/rise-kitchen-table-issues-hollow-political-catchphrase\">The New Republic<\/a>.<\/em><\/figcaption><\/figure>\n<p>Speaking to Cointelegraph, Bill Barhydt, CEO of cryptocurrency investment app Abra, echoed this sentiment saying retail investors \u201cshould always pay themselves first.\u201d To him, however, paying themselves first \u201cmeans keeping savings in crypto for the long term, especially Bitcoin and Ether.\u201d<\/p>\n<p>Barhydt added he keeps the majority of his wealth in cryptocurrencies \u201calong with some cash in high-yield interest accounts.\u201d During market crashes, he allocates 10% to 25% of his savings to stocks, he said.<\/p>\n<p>To Barhydt, cryptocurrency investments should be a part of a retail investor\u2019s portfolio, while he himself questions the \u201cbalanced portfolio concept.\u201d He added that \u201cbalanced portfolios are for lazy people who don\u2019t do research, understand markets or can\u2019t stomach short-term losses.\u201d\u00a0<\/p>\n<p>Instead, Barhydt believes wealthy investors \u201cknow that concentrating investments based on their own convictions and homework, plus the ability to deal with losses, is their key to success.\u201d<\/p>\n<p>Speaking to Cointelegraph, Stephen Stonberg, CEO of cryptocurrency exchange Bittrex Global, noted that for retail investors with small amounts to invest or limited access to portfolio strategies, \u201ccrypto investments may not make the most sense on a large scale \u2014 but that doesn\u2019t mean they shouldn\u2019t invest.\u201d<\/p>\n<p>Stonberg said investing in crypto is being equated to investing in the internet in 1993 \u2014 ahead of the dot-com bubble \u2014 and, as such, the \u201cbest approach would be to look at making investments in more established coins such as Bitcoin and Ether\u201d as these have strong use cases and established communities. He added:<\/p>\n<blockquote><p>\u201cCrypto should be a part of a more balanced portfolio and investors should be careful to do their own research. Diversification is a tried and trusted portfolio model and has shown to be defensive against waves of turmoil.\u201d<\/p><\/blockquote>\n<p>Caleb Silver, editor-in-chief of investing and finance website Investopedia, was more conservative, saying that cryptocurrencies are \u201chighly volatile and speculative investments and should be handled as such.\u201d<\/p>\n<p>To Silver, cryptocurrencies \u201cshould not be considered elements to balance a portfolio.\u201d Given the performance of \u201cmany of the largest cryptocurrencies,\u201d investors could consider limited exposure to the asset class but \u201cshould not depend on it to balance their portfolios.\u201d<\/p>\n<p>Thomas Perfumo, head of business operations and strategy at cryptocurrency exchange Kraken, told Cointelegraph the exchange \u201ccannot provide recommendations on what people should do with their money\u201d but showed excitement over \u201cthe ability to earn rewards through staking.\u201d<\/p>\n<p>As to how much should be allocated to a portfolio, most experts responded, \u201cit depends,\u201d with any actual figures always being below 10% of a portfolio.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Crypto_funds_or_indexes\"><\/span>Crypto, funds or indexes?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In early 2021, strategists at Wall Street banking giant JPMorgan suggested a 1% portfolio allocation to BTC could serve as a hedge against fluctuations in traditional asset classes such as stocks, bonds, and commodities. In January 2022, billionaire Ray Dalio recommended a 1\u20132% allocation for the flagship cryptocurrency as an inflation hedge.<\/p>\n<p>Speaking to Cointelegraph, Bittrex Global\u2019s Stonberg advanced that a relatively \u201csafe\u201d allocation would be at 5%, enough to be considered low-risk while also allowing for \u201cmarginal return.\u201d Silver echoed Stonberg\u2019s figure, adding that investors should allocate the 5% with \u201ccomplete awareness that they could lose it all quickly.\u201d<\/p>\n<p>Silver said that cryptocurrency index funds, futures exchange-traded funds (ETFs) or other diversified investments could be less risky while also producing \u201cfar less upside than individual tokens.\u201d He added an alternative would be companies and ETFs around the blockchain space.<\/p>\n<p>Stonberg, on the other hand, pointed out the \u201cmost economical choice is to purchase cryptocurrencies directly rather than hold an index,\u201d as there is no reason to cover an index\u2019s custody and marketing costs if investors can just pick cryptocurrencies directly.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-03\/e0a0854c-792d-49aa-a0fb-6289bf2ebf68.png\"><figcaption style=\"text-align: center;\"><em>One-year Bitcoin price chart. Source: Cointelegraph.<\/em><\/figcaption><\/figure>\n<p>Johnny Lyu, CEO of cryptocurrency exchange KuCoin, did not specify any type of allocation. He, instead, noted that specific recommendations depend on several factors including investors\u2019 financial and technical literacy, their goals, strategies and risk appetite.<\/p>\n<p>To Lyu, more crypto-savvy investors should allocate more to crypto than those who are just curious about the space. He added:<\/p>\n<blockquote><p>\u201cNo matter how much you invest in crypto, it gives you some advantages in terms of personal, financial and career advancement if you just understand how digital money works.\u201d<\/p><\/blockquote>\n<p>Lyu also said that a golden rule for any investment is diversification. An ideal crypto portfolio consists of \u201ccoins of different categories such as top crypto assets, stablecoins, nonfungible tokens, decentralized finance instruments etc.\u201d Such a portfolio, he said, should be part of a larger one with non-crypto assets.<\/p>\n<p>Investing only what investors can afford to lose is a typical disclaimer in the space, but what if investors aren\u2019t able to stomach the losses that may come? In 2017, BTC rallied to a high near $20,000 before plunging. By late 2018, it was trading at little over $3,000, having shaken off thousands of investors.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Crypto_investing_boils_down_to_risk_tolerance\"><\/span>Crypto investing boils down to risk tolerance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Those with the stomach to stick to their strategy likely benefited, as in late 2021 when Bitcoin hit a new high near $69,000. Those who didn\u2019t, watched the rollercoaster unfold in disbelief. Stonberg offered a solution to the problem:<\/p>\n<blockquote><p>\u201cA good way to approach crypto is to first determine your risk tolerance: The amount of investment capital you have to work with and your ideal amount of exposure while factoring risk.\u201d<\/p><\/blockquote>\n<p>Even if some investors put in their hard-earned money while understanding that their investment may lose all of its value, it\u2019s clear that cryptocurrencies and their innovations are here to stay. So much so that BTC is now being compared to a digital version of gold.<\/p>\n<p>Stonberg concluded by saying he is \u201cconvinced that crypto investing will become a regular point of conversation for a family in the next year or two\u201d as cryptocurrencies become mainstream. Silver agreed, saying that the crypto space is \u201cwhere finance, investing and payments are moving. The more we talk and learn about these themes, the smarter we will be as consumers and investors.\u201d<\/p>\n<p>Barhydt suggested that cryptocurrency investments should be a secondary investment discussion to be had, with the first one being \u201chow are families going to guarantee that they can pay themselves first.\u201d<\/p>\n<p>At the end of the day, it\u2019s important first to analyze the purpose of cryptocurrency investments. If investors are picking up BTC because of its resistance to censorship, they can easily stomach short-term price fluctuations. If their goal is to retire early and live on an island, bear markets may become a nightmare regardless of the chosen investment vehicle.<\/p>\n<p><em>The views and opinions expressed here do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/kitchen-table-bitcoin-how-should-average-investors-approach-crypto\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Kitchen table Bitcoin: How should average investors approach crypto? &#8220; Cryptocurrencies have come a long way over the last few years, so much so that their market capitalization is now above the $2 trillion mark, and large businesses including Tesla and MicroStrategy have invested billions in Bitcoin (BTC). While institutional investments in crypto assets&#8230;<\/p>\n","protected":false},"author":1,"featured_media":423312,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDMvMTA1MjQ5MjYtODI3Ni00YzAzLWFkZjQtYjVmNjUwMWJjNDA3LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,75849,74891,82239,74355,73711],"class_list":["post-423311","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-etf","tag-ethereum","tag-index-funds","tag-adoption","tag-investments"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/423311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=423311"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/423311\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/423312"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=423311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=423311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=423311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}