Most mainstream guidance is to keep Bitcoin (and all crypto) as a small slice of your net worth, usually in the 1%–5% range, and only more if you deeply understand the risk and can tolerate large drawdowns. How much you personally “should” own depends on your total net worth, time horizon, and how you emotionally handle big price swings.
Typical allocation ranges
- 0%–1%: Appropriate if you are very risk-averse, near a major goal (house, retirement), or simply unsure about Bitcoin’s long‑term role.
- 1%–3%: Common “starter” or moderate allocation; big enough to matter if Bitcoin does well, small enough that even a 70–80% crash will not derail your finances.
- 3%–5%: For investors with higher risk tolerance and long time horizons who view Bitcoin as a meaningful but still satellite holding.
- 5%+ : Speculative/aggressive territory; some experts and research pieces argue you can justify 5–10% or more, but only if you fully accept substantial volatility and potential permanent loss.
Key questions to decide your number
Ask yourself:
- If Bitcoin fell 70% and stayed down for years, would that materially change your life or make you panic‑sell? If yes, reduce the allocation.
- What is your investing time horizon? Younger, long‑horizon investors can usually tolerate a somewhat higher allocation than those close to retirement or big spending needs.
Will this allocation keep you diversified? Most portfolio research finds that somewhere in the low single digits (around 1%–3%) can improve diversification without dominating portfolio risk.
Practical rule of thumb
For many people, a reasonable starting framework is:
- Conservative: 0%–1% of net worth in Bitcoin.
- Moderate: 1%–3% of net worth.
- Aggressive but still disciplined: 3%–5% of net worth.
You can then adjust up or down over time as your income, net worth, and understanding of Bitcoin change, but always keep the focus on whether it truly has a long‑term place in your plan rather than on short‑term price moves.
For the record, I have avoided Bitcoin and crypto in my portfolio. It has been around long enough and Bitcoin is not in active use in most everyone’s lives. Zelle payments have been around a shorter time period and most people are using it regularly.