What you should know about investing in cryptocurrency amid volatility

Financial Advisor on Investing in Crypto:'I'm Still Bullish on the Technology'

It’s been a tough time for cryptocurrencies, but despite the volatility, you still need to understand how the technology works, said Douglas Boneparth, a board-certified financial planner based in New York.

The digital currency market collapsed nearly $1.4 trillion in 2022 after a cascade of bankruptcies and liquidity problems, including the high-profile collapse of crypto exchange FTX. In March, crypto-focused firm Silvergate Capital announced plans to cease operations, and regulators shut down crypto lender Signature Bank.

Although the crypto market rallied in early 2023, assets recently tumbled again, with Bitcoin falling below $20,000 on Friday, sparked by a sell-off in US stock markets. However, Bitcoin surged 10% Monday after news broke from US regulators’ plans to protect depositors and financial institutions linked to Silicon Valley Bank.

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Boneparth, president of Bone Fide Wealth and a member of CNBC’s Financial Advisor Council, said recent events and the volatility of the crypto market have made him even more “optimistic” about learning more about the technology.

“The decentralized world of finance is now more connected than ever to the traditional world of finance,” he said.

An early adopter of the digital currency since 2013, mainly in BitcoinBoneparth said there is much to learn about the technology that we will inevitably see more of in the future.

“It doesn’t necessarily mean that you should distribute your money there,” he said. But he believes you should invest your time and energy to see where the technology could go.

“I learned a lot on my journey without having to take an exorbitant risk,” said Boneparth.

When it comes to cryptocurrency, he said the “best thing you can do” is to educate yourself about the technology and how decentralized finance works. “A little would go a long way,” he added.

I learned a lot on my journey without having to take an exorbitant risk.

Douglas Bonepart

President of Bone Fide Wealth

“This is powerful stuff,” said Boneparth. “It’s not always about throwing your money into the latest crypto craze, it’s about learning what’s at stake.”

How crypto can impact investment goals

While many advisors don’t recommend clients to buy or sell digital currencies, Boneparth said investors may come to his practice looking for advice on existing crypto allocations.

“Some people have accumulated quite a lot of money in cryptocurrency,” he said. “And it’s my job to show them what the risks are, how that concentration and that asset can impact their long-term goals and portfolio.”

Boneparth said it’s important to understand how owning a certain type of asset can impact your financial goals, particularly “volatile assets” like cryptocurrencies.

https://www.cnbc.com/2023/03/14/what-to-know-about-investing-in-cryptocurrency-amid-volatility.html What you should know about investing in cryptocurrency amid volatility


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