Ask yourself the following questions:
“Am I ready to lose all of my investments in Bitcoin?”
“How would I behave, if Bitcoin price crashed 80%?”
I even hear stories of people withdrawing credit from bank to invest more than 100% of their net worth in Bitcoin.
If you find yourself in that situation let me tell you one thing. Losing all of your savings in an investment is bad. What is worse is having to pay back that credit, if you lose 100% of your investment.
Remember, you have more than two choices. Going all-in or not investing at all are not the only choices you have. You can also invest any amount in between. Just take into account that the price could go down 80%, which happened before, and your investment can actually go to zero, because you can somehow lose your Bitcoin holdings, which happened to many people as well.
At this moment, 4% of my savings are in Bitcoin. I’m comfortable with losing it all. I’m also aware that the price can retrace 80%. If that or any serious crash above 20% happens, I will be willing to increase my position to maintain around a 5% weighting to my full portfolio. I will not sell though if the weight goes above 5% by price movements. I don’t believe in “watering the bushes and cutting trees” when it comes to investing.
Disclosure and Disclaimer: At the time of writing, 4% of my savings were in Bitcoin. This post is for information purposes only and not intended to be investment advice.
Software developer with a Ph.D. and 15 years of experience. I write daily on personal development and life lessons. Sign up to my email newsletter to receive a weekly overview of my latest content on personal development and life lessons.