What is the right crypto allocation for your portfolio?
Unless the plan is Lambo or food stamps, we’d advise against it. Figuring out the right amount can be tricky — and the answer varies depending on whom you ask and your circumstances.
How Mr. Wonderful invests in crypto
Investor and entrepreneur Kevin O’Leary of Shark Tank — shares his views on how he invests in the sector (Insider):
- Limits his crypto portfolio to 20% of his entire portfolio, and no single asset takes up more than 5% of his crypto portfolio.
- He holds 32 crypto positions — including Solana ($SOL), Bitcoin ($BTC) and Polygon ($MATIC).
He takes a startup investment approach — where one or two positions can make up for all the losers — even if the other positions go to zero.
His advice: Heavy diversification — “because you have no idea what’s going to work.” He looks at whether the project is solving a problem for any crypto investment and if that problem can generate economic value.
Long-term crypto portfolio
Ryan Allis, Managing Partner of crypto hedge fund HeartRithm — shares his top 30 long-term crypto portfolio picks in his newsletter each week.
- 30% in Ethereum Layer 1/Layer 2s — i.e., Ethereum ($ETH) or Polygon ($MATIC)
- 20% in Ethereum competitors — i.e., Avalanche ($AVAX), Terra ($LUNA), Polkadot ($DOT), Solana ($SOL), Cosmos ($ATOM) and Fantom ($FTM)
- 15% in decentralized finance protocols — i.e, Uniswap ($UNI), SushiSwap ($SUSHI), Aave ($AAVE)
- 10% in core technology — i.e., Chainlink ($LINK), THORChain ($RUNE)
The remaining 25% is distributed 5% each in the gaming/NFT, crypto exchanges, money transfer, centralized lending and wireless tech sectors.
Allis also recommends dollar-cost averaging into holdings — and keeping a 5-10 year time horizon.
Investors: Long-term game
20% of their total allocation may be too large of a percentage for many investors. But deciding on the right amount can be tricky.
Financial advisors advise max allocations between 2-5% of the total portfolio, with younger investors able to invest a more considerable amount.
Per Alex Doll of Anfield Wealth Management — allocations also depend on how investors react to volatile swings.
- How would you react if your crypto portfolio fell 50%? — a common occurrence in crypto.
- Even Bitcoin — the most blue-chip crypto of them all — has fallen nearly 50% twice in the past year.
Crypto starter pack: How to start investing in crypto