Ric Edelman, one of the most well-known financial advisors in the United States, said cryptocurrencies are becoming the mainstream investment tool and are beginning to play a key role in long-term investment strategies.
Edelman pointed out that financial advisors should advise clients to allocate 10% to 40% of their portfolio to crypto assets.
Known for his careful approach to cryptocurrency in the 2010s, Edelman saw just 1% crypto allocation to investors in his 2021 book, “Truth on Crypto.” However, in an interview with CNBC’s Crypto World this week, he announced that he has dramatically revised that ratio.
Edelman believes this fundamental change is attributed to the transformations that the crypto industry has undergone over the past four years. “Four years ago it was unclear whether the government would ban Bitcoin, whether the technology would work, whether individuals and institutions would adopt these assets. All of these questions have been answered today.
Citing the billion-dollar inflows into Bitcoin ETFs this year as one of the most specific indicators of this transformation, Edelman said this is a clear indication that cryptocurrency has entered the radar of financial advisors and long-term investors.
Edelman also argued that the traditional 60% equity/40% bond model of investments is no longer valid today. He reminded us that the average life expectancy in the United States has increased from 47 years in the 1900s to 85 years today, and thanks to medical advances, this life expectancy could reach 100 years in the next 30 years.
“If you’re an advisor and you have a long-term investment plan for a 30-year-old, you tell them to invest 100% of their money in stocks because they have 50 years ahead of them. Today’s 60 looks like the 30-year-old yesterday,” he said. Therefore, he argued that low returns from bonds are no longer sufficient and that cryptocurrencies can fill this gap.
Edelman also said that the price movement of Bitcoin is in sync with other assets such as stocks, bonds, gold and oil, making it extremely valuable to diversifying the portfolio.
Edelman said some analysts have seen Bitcoin rise from $150,000 to $250,000 by the end of the year and added that “these estimates still seem cautious.”
*This is not investment advice.
