It's been a tough time for cryptocurrencies, but despite the volatility, you still need to know how the technology works, said Douglas Boneparth, a New York-based certified financial planner.
The digital currency market was reduced by almost 1.4 trillion dollars in 2022, after a cascade of bankruptcies and liquidity problems, including the prominent FTX crypto exchange collapse. In March, Crypto-Focused Silvergate Capital announced plans to close operations and regulators Shut Down Crypto Lender Signature Bank.
Although the crypto market rallied in early 2023, assets recently fell again, with bitcoin falls below $20,000 on Friday, triggered by a stock market sell-off in the US, but bitcoin increased by 10% on Monday, following the news from US regulators plans to safeguard depositors and financial institutions associated with Silicon Valley Bank.
Boneparth, who is president of Bone Fide Wealth and a member of CNBC's Financial Advisory CouncilHe said that recent events and the volatility of the crypto market have made him even more "optimistic" about learning about the technology.
"Clearly, the decentralized finance world is interconnected with the traditional finance world now more than ever," he said.
An early adopter of the digital currency since 2013, mainly in bitcoinsBoneparth said there is a lot to learn about the technology that we will inevitably see more of in the future.
"This doesn't necessarily mean you should allocate your money there," he said. But he believes he should invest his time and energy to see where the technology is headed.
"I've learned a lot on my journey without taking an exorbitant risk," Boneparth said.
When it comes to cryptocurrency, he said that "the best thing to do" is to learn about the technology and how decentralized finance works. "A little would go a long way," she added.
I have learned a lot on my journey without taking an exorbitant risk.
douglas boneparth
Chairman of bona fide wealth
"That's powerful stuff," Boneparth said. "It's not always about putting your money into the latest cryptocurrency fad, it's about learning what it's about."
How cryptocurrencies can affect investment objectives
While many advisors won't recommend clients buy or sell digital currency, Boneparth said investors can turn to his practice for guidance on existing crypto allocations.
โSome people have accumulated quite a bit of money in cryptocurrency,โ he said. "And it's my job to show them what the risks are, how that concentration and that asset can affect their long-term goals and their portfolio."
Boneparth said it's important to know how owning any particular type of asset can affect your financial goals, especially "volatile assets" like cryptocurrencies.
