- The price of bitcoin surpassed $30,000 this week as investors prepare to enter bitcoin exchange funds and other big names in the digital currency space.
- However, financial advisors urge investors to do research and understand their risk exposure before investing.
© Provided by CNBCBitcoin has been in the news with ETFs and other big names potentially entering the digital currency space, and financial experts have advice for investors looking to get in on the action.
Bitcoin prices surged past $30,000 as traders piled high on bitcoin ETF applications from companies such as BlackRock, WisdomTree and Valkyrie. Bitcoin is up more than 80% in 2023, but still more than 50% from its November 2021 high.
US investors have access to bitcoin futures ETFs that invest in bitcoin futures contracts or agreements to buy or sell at a later agreed upon price. However, the long-awaited Bitcoin Spot ETF invests directly in the digital currency.
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"I think the Bitcoin ETF is a critical moment for Bitcoin," said Douglas Boneparte, a New York-based certified financial planner and president of BoneFide Wealth. He is a member of CNBC's financial advisory board.
"It's a very sad announcement to see BlackRock issue this order," he said.
Restrict access to "high risk" resources.
Bitcoin Spot ETF allows investors to buy and sell the digital currency through a brokerage account, enabling easy access to the asset. However, "getting something easy doesn't mean you have to dive right in," Bounpart said.
Spot Bitcoin ETFs, if approved, said investors should treat them like any other asset. You should always do your research and exercise due diligence before risking your money.
As investors value "high-risk assets" like bitcoin, the financial services industry may suggest limiting the portfolio to 1 percent to 5 percent, Bounpart said. According to him, he limits speculative assets like Bitcoin, private equity, hedge funds and others to 5-10% of his investment assets.
A chance to grow by a small percentage
Until next time
A small offering can still have big upside potential, says Ivory Johnson, CFP and founder of Delancey Wealth Management in Washington, DC. It also proposes to limit the influence of bitcoin.
"If bitcoin has the potential to double and has a 2% spread, that's huge," said Johnson, a CNBC advisory board member. And if the price drops 50%, he says, you'll only lose 1% of your portfolio.
Of course, the target investment allocation should always be based on your risk tolerance, timing and goals, adds Bounpart.