Yale economist Alekh Tsivinsky, who taught economics at the prestigious Yale University for many years, said that every investor who believes in Bitcoin should invest at least 6% of their assets in cryptocurrency.
“If you, as an investor, think that Bitcoin will perform just as well, then you should keep 6% in your portfolio. If you think it will double, you should keep 4%. Under other circumstances, if you think it will trade much worse, then you should still have 1%,” Tsivinsky shared in an interview with Yale candidate Yukun Liu.
Billionaires use a similar method
In an interview with CNBC last month, Mark Lasrey, co-founder of Avenue Capital Group, whose net worth is estimated at about 1,68 billion dollars, said that he invested more than 1% of his money in cryptocurrency.
Given the net worth of its capital of $ 1,68 billion, 1% will be equivalent to $ 16,8 million that will be invested in cryptocurrency, such as Bitcoin and Ether.
Said Lasri:
“I would not say that [Bitcoin] is completely speculative, but it is speculative. About 1% I invested in Bitcoin several years ago. I bought a lot more last year, when probably the average price of Bitcoin ranged from $ 5000 to $ 7 500. ”
Some billionaire investors such as Galaxy Digital's Mike Novogratz and founder PayPal Peter Thiel has reportedly contributed a significant portion of his funds to cryptocurrency, and Novogratz in particular has invested a significant amount in other major cryptocurrencies such as EOS.
Tsivinsky stressed that every investor who believes that Bitcoin or cryptocurrency will survive as an asset class and have potential in the long term should have at least 1% of cryptocurrency assets.
Currently, as of August 2018, the cryptocurrency market still remains in its infancy, without the participation of large institutional investors.
Last month, reliable custodian solutions have emerged such as Coinbase Custody, but analysts expect institutional investors to take at least 3-6 months of analysis to enter the cryptocurrency market.
Bitcoin exchange-traded funds (ETFs), which investors expect to significantly improve the liquidity of digital currencies, especially if they enter the US market, will not be received until February of the 2019 year.
Taking into account all these factors, as well as past BTC trading in 2015 and 2017, economists believe that investors should retain a small portion of their assets in cryptocurrency as a bet on its stability.
Past success cryptocurrency does not guarantee future success
One of the common misconceptions that investors make in the stock market is that past performance is a guarantee of future valuation.
“Of course, one must remember that, as with any other asset, past performance is no guarantee of future returns. It is possible that the cryptocurrency will completely change its behavior, but at present the market does not believe that this will happen,” Tsivinsky emphasized.