Cryptocurrencies have surged to new highs after US President-elect Donald Trump appointed pro-crypto officials to his administration. The appointments suggest potential regulatory changes that could benefit digital assets.
However, financial advisors remain cautious about recommending significant crypto allocations due to the asset’s speculative and volatile nature. They recommend limiting exposure to a modest allocation within a portfolio, typically between 3% to 5%.
Advisors face challenges in valuing cryptocurrencies, as traditional metrics don’t apply. Instead, they rely on factors like network adoption, utility, and macroeconomic sentiment. While some advisors personally hold crypto, many more educate clients about its nuances to avoid speculation.
The launch of Bitcoin exchange-traded funds (ETFs) has increased investor interest. The iShares Bitcoin Trust ETF has reached $30 billion in assets under management in just over a decade. Advisors suggest a small allocation to crypto can have minimal impact on an investor’s return, with regular rebalancing recommended.
Some advisors view crypto as a rapidly evolving space with significant uncertainty, emphasizing caution when discussing it with clients. Despite this, many are hands-on with digital assets, using them to better understand the ecosystem and educate clients.
Source: https://money.usnews.com/investing/articles/is-bitcoin-good-investment-under-trump