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Ric Edelman, one of the most well-known financial advisors in the United States, said that cryptocurrencies have now become a mainstream investment tool and have begun to play an important role in long-term investment strategies.
Edelman noted that financial advisors should advise their clients to allocate 10% to 40% of their portfolios to crypto assets.
Edelman, who was known for his cautious approach to cryptocurrencies in the 2010s, saw a crypto allocation of just 1% to investors as reasonable in his 2021 book The Truth About Crypto. However, in an interview with CNBC’s Crypto World this week, he announced that he had dramatically revised that ratio: “Today I say 40%, which is surprising. No one has ever said that before.”
Edelman attributes this radical change to the transformation the crypto industry has undergone over the past four years. “Four years ago, it was unclear whether governments would ban Bitcoin, whether the technology would work, and whether individuals and institutions would adopt these assets. Today, all of these questions have been answered. Crypto is now a mainstream asset class,” he said.
Citing the billions of dollars in inflows into Bitcoin ETFs this year as one of the most concrete indicators of this transformation, Edelman said this was a clear sign that cryptocurrencies had entered the radar of financial advisors and long-term investors.
Edelman also argued that the traditional 60% stock/40% bond model of investing is no longer valid today. He reminded us that life expectancy in the US has increased from 47 years in the 1900s to 85 years today, and that thanks to medical advances, this life expectancy could reach 100 years in the next 30 years.
“If you are an advisor and you are making 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-year-olds are almost like yesterday’s 30-year-olds,” he said. Therefore, he argued that the low returns from bonds are no longer enough and cryptocurrencies can fill this gap.
Edelman also said that Bitcoin’s price movements are not synchronized with other assets like stocks, bonds, gold or oil, making it very valuable for portfolio diversification: “The crypto asset class offers higher return potential than almost any other asset.”
Edelman said some analysts predict that Bitcoin could rise to $150,000 to $250,000 by the end of this year and see $500,000 within a decade, adding, “These estimates still seem cautious to some.”
*This is not investment advice.