Not financial, legal, or tax advice. This is educational, not a personalized recommendation. Consult a financial advisor for your specific situation.
There's no universal answer to how much of a portfolio should be in crypto. It depends on your risk tolerance, time horizon, and overall financial picture, but many general frameworks suggest treating it as a small, high-risk allocation rather than a core holding, within the broader plan covered in \[pillar hyperlink: How to Start Investing\].
Risk tolerance
How much volatility you can stomach without making panicked decisions should shape your allocation more than any single rule of thumb. Someone with a long time horizon and stable finances can typically tolerate more exposure than someone who might need the money soon.
Allocation frameworks
Some investors use a small fixed percentage of a broader portfolio, commonly cited ranges are in the low single digits to around 5-10% for risk-tolerant investors, treating crypto as a satellite allocation alongside more traditional assets, not a replacement for them.
Diversification
Within crypto itself, concentrating entirely in one asset carries more risk than spreading across a few established ones. The same logic that applies to traditional portfolios, not betting everything on one position, applies here too. See Long-Term vs Short-Term Strategies for how holding period fits into this.
Caveats
These frameworks are general starting points, not personalized advice, and none of them account for your specific debts, goals, or emergency savings. Never allocate money you can't afford to lose or might need on short notice.