Crypto Allocation Recommended at 40% by Edelman

Financial advisor Ric Edelman has recommended that clients allocate between 10% to 40% of their portfolio to cryptocurrencies. Edelman, the founder of the Digital Assets Council of Financial Professionals, suggests that the percentage of allocation should be determined by the client’s risk appetite. For conservative portfolios, he recommends a minimum of 10% allocation to crypto, while for more aggressive scenarios, up to 40% could be allocated.

Edelman’s views on crypto allocation have evolved significantly over the past few years. In 2021, he claimed that a crypto allocation of even 1% was reasonable. However, given the evolution of the crypto market and regulations over the past four years, Edelman has recalibrated his recommendation. He stated, “Today I am saying 40%, that’s astonishing. Nobody ever, anywhere, has ever said such a thing.”

Edelman believes that cryptocurrencies now represent the “best investment opportunity of the decade.” He has been involved in the crypto space for more than a decade and has been urging everyone to invest in Bitcoin since 2018. The massive change in the evolution of crypto over the past four years has led to his radical shift in crypto allocation strategy. Four years ago, the fate of the crypto industry looked uncertain, with questions about government support, technological obsolescence, and investor adoption. However, these uncertainties have been resolved, and crypto is now considered a mainstream asset.

Edelman also highlighted the increasing life expectancy in the U.S., which has grown from 47 years in the 1900s to 85 years today. He believes that with people expected to live longer, it is essential to invest in crypto for long-term wealth. He suggests abandoning the traditional 60-40% split in portfolio, where 60% is allotted to stocks and 40% to bonds, and instead investing in crypto.

Edelman pointed out that despite increasing institutional engagement in crypto, the adoption rate of cryptocurrencies remains very low, around 5%. As adoption increases and more people invest in crypto, the market will see “massive asset inflows.” This means that the more people buy fixed supply assets, like Bitcoin, the higher their price is going to rise. He also noted that since cryptocurrencies are not heavily correlated to stocks, bonds, oil, gold, or commodities, they offer a bigger opportunity for higher returns.

Edelman believes that the financial planning community needs to realize that “crypto is no longer an outlier asset class” and that much of its speculativeness and uncertainty is now gone. Crypto has become mainstream with financial giants like JP Morgan wading into the market. He added that blockchain technology is going to “totally change finance on this planet.”