How Much Bitcoin Should You Own?
Opinions vary but consider these factors.
Bitcoin is the world’s largest cryptocurrency. It’s quickly becoming more and more mainstream. Veteran investors like Paul Tudor Jones are now invested in bitcoin. Jones has almost 2% of his assets in bitcoin. He’s called it the ‘great speculation’ and it appears that he and other major wall street players don’t want to miss out on the potential upside.
Veteran investor Paul Tudor Jones has invested close to 2% of his assets in bitcoin. As of mid-2020, Jones said the amount “seems like the right number right now.”
The Winklevoss twins are making the case for a $500,000 bitcoin, calling it a hedge against inflation. The Winklevii have been accumulating bitcoin for years now and are more or less the poster boys for a certain style of next-generation cryptocurrency investors.
We’ve also seen other big names in bitcoin like Wences Casares and Anthony Pompliano calling their shot on bitcoin hitting price tags like $100,000 or even $1 million. These people mentioned above likely have a lot more bitcoin than the average investor though... So, how much bitcoin should you own?
0.28 Bitcoin Makes You the 1%
Blockworks Group analyst Jake Levison says that owning just 0.28 bitcoin means “you’re statistically guaranteed to be in the richest 1% of the world in BTC terms.”
0.28 is or isn’t a lot of bitcoin, depending on your current financial state of course… It is, however, arguably attainable for the average investor if you buy bitcoin over time and implement a Dollar-Cost Averaging strategy. As of writing, 0.28 bitcoin equals roughly $3,250 USD.
Bitcoin, like most financial assets, is seeing a concentration of HODLers toward the top. While it might be attainable to hit that 0.28 mark, there’s a far more elite group of investors that have massive amounts of coin beyond that 1% level. Your intention may not be to enter the statistical bitcoin 1% or higher though, which means you can get involved at a much lower level.
Some Advisors Say 1% of Your Net Worth
Some financial advisors have come out and recommended those interested in bitcoin put in no more than 1% of their total net worth. This could be a similar approach to what Paul Tudor Jones is doing. It’s a recognition that investing bitcoin is risky but that it’s also something to pay attention to.
How much is 1% of your net worth? That depends on your situation and it also depends on bitcoin’s price at any given time. Because the price can be volatile, the percent of your net worth that bitcoin makes up will vary over time — regardless of the number of satoshis or bitcoin you own. That’s key to understand and it means that assigning a hardline percentage of your portfolio to bitcoin isn’t necessarily possible.
Shooting for roughly 1% of your investment portfolio could be one strategy. But if you’re looking for a percentage, consider also looking at the other buckets in your portfolio before deciding what makes the most sense.
Comfort Level Is Key
Investing in bitcoin doesn’t have to be so different from investing in anything else. How do you treat your other financial investments? Consider implementing a similar approach to crypto.
Although none of this is financial advice, it’s more or less common sense investing to ensure you’re comfortable with whatever amount of money you’re investing. You shouldn’t invest any amount of money that you can’t afford to lose. Know your comfort level. Bitcoin, like most investments, comes with a high degree of risk, especially as it relates to your strategy. There’s a lot to consider before you buy bitcoin.
Know you comfort level when it comes to investing in bitcoin. Treat it like you do your other investments, while also understanding that this space is newer than most. The risk could be higher, but the upside could be greater.
Dollar-Cost Averaging Can Help
Dollar-Cost Averaging can get you into bitcoin slowly, over time. Putting all of your chips in on any investment at one time brings with it a level of pressure. You can buy bitcoin daily, weekly, monthly, or really at any other time interval for a set amount each time.
As you can assume based on the 0.28 number too, you don’t have to buy a full bitcoin to get in the game. You can own as little as one satoshi or one hundred millionth of a single bitcoin (0.00000001 BTC).
Dollar-Cost Averaging is one strategy to consider if you want to get into bitcoin. There are plenty of others, most of which end up with you HODLing bitcoin. You can even set out to earn bitcoin rather than purchase it. It might be harder to find consistent ways of doing so, but you can certainly find people willing to pay you in bitcoin for goods or services.
Conclusion — Key Takeaways
There are only ever going to be 21 million bitcoins in existence. Do you own any now or do you plan to own any in the future?
If you’re considering buying bitcoin, also consider your comfort level, the strategy of investing, and you should follow what’s happening in the cryptocurrency space. Know what you’re getting into and find a way to get involved that works for you. Again, none of this is financial advice but these sentiments appear to be a consensus among Bitcoiners.
There’s a reason people like Paul Tudor Jones and the Winklevii who are invested in bitcoin. It’s a hedge against inflation, digital gold, groundbreaking technology being treated like a financial asset, and on and on. It’s also not going anywhere so if it’s caught your eye, educate yourself on the space and consider getting more involved.