According to the investment manager, a crypto portfolio should look like
Ric Edelman, one of the most influential experts in personal finances, has fundamentally reconsidered his attitude towards the allocation of cryptocurrencies. After years of careful optimism, he now believes that digital assets earn a much larger proportion of investment portfolios than ever before.
In 2021, Edelman recommended investors to invest only 1% of their portfolio in cryptocurrencies. At that time, the landscape of digital assets was still characterized by regulatory uncertainty and skepticism with regard to their long -term acceptance. Four years later, Edelman now recommends an allocation of up to 40%.
“Today I say 40%that is amazing”, said Edelman opposite CNBCS CRYPTO World and thus admitted a dramatic U -turn in his own investment philosophy. In his opinion, this change not only reflects market trends, but also a complete change in the perception of cryptocurrencies in the financial world as a whole.
Why cryptocurrencies now play a larger role
Edelman attributes his U -turn to the maturation of the industry. The most important doubts from four years ago – such as the risk of state bans, questions about the future viability of the blockchain and the lack of acceptance in the general public – are largely cleared. Bitcoin is now widely accepted and the engagement of institutional investors continues to increase.
One of the clearest indicators for this change is the explosive growth of Bitcoin ETFs, which recorded tributaries in billions of bills this year. For Edelman, this is proof that cryptocurrencies are no longer a marginal investment, but now an integral part of modern portfolios.
The end of the 60/40 model
Edelman also questions traditional portfolio structures. The 60/40 model for shares and bonds, which has been established for a long time, is overtaken in a world in which people live longer and need higher long-term returns. In view of a life expectancy in the United States, which may have reached 100 years in the coming decades, strategies for retirement must be reconsidered.
“You have to achieve better returns than last longer with bonds and stocks than ever,” said Edelman. In this new reality, cryptocurrencies are not only a speculative object, but a necessary instrument for growth and diversification of portfolios.
Cryptocurrencies as portfolio improvements
According to Edelman, what makes cryptocurrencies particularly valuable is its missing correlation with traditional assets such as stocks, bonds or gold. This independence makes digital assets a strong candidate for improving the overall performance of a portfolio based on modern portfolio theory.
“The investment class of cryptocurrencies offers the opportunity to achieve higher returns than they can achieve with practically any other investment class,” he said.
Conservative but optimistic forecasts
Edelman does not give any specific forecasts, but refers to price targets from analysts that assume that Bitcoin could reach $ 150,000 to $ 250,000 by the end of the year and even $ 500,000 by the end of the decade. It is noteworthy that he describes these estimates as “conservative” compared to other market expectations.
