What to know about investing in cryptocurrency during volatile times

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Cryptocurrency has had a tough time, 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 fell nearly $1.4 trillion in 2022, following a cascade of bankruptcies and liquidity issues, including the highly publicized collapse of crypto exchange FTX. In March, crypto-focused Silvergate Capital announced plans to halt operations and regulators shut down crypto lender Signature Bank.

Although the crypto market rallied in early 2023, assets have recently fallen again, with bitcoin falling below $20,000 on Friday, triggered by a US stock market selloff. But bitcoin jumped 10% on Monday, following news from US regulators. ‘ plans to protect depositors and financial institutions associated with Silicon Valley Bank.

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Boneparth, who is chairman of Bone Fide Wealth and a member of CNBC’s Financial Advisor Council, said recent events and volatility in the crypto market have made him even more “optimistic” about learning about technology.

“Clearly, the decentralized financial world is more interconnected than ever with the traditional financial world,” he said.

An early adopter of digital currency since 2013, primarily in bitcoin, Boneparth said there is a lot to learn about the technology that we will inevitably see more of in the future.

“That doesn’t necessarily mean you should allocate your money to it,” he said. But he thinks you should invest your time and energy to see where the technology can go.

“I learned a lot during my journey without having to take an exorbitant risk,” Boneparth said.

When it comes to cryptocurrency, he said the “best thing you can do” is to learn more about the technology and how decentralized finance works. “A little would go a long way,” he added.

I learned a lot in my career without having to take exorbitant risks.

Douglas Boneparth

President of Bone Fide Wealth

“It’s a powerful thing,” Boneparth said. “It’s not always about putting your money into the latest crypto craze; it’s about learning what it’s all about.”

How Crypto Can Affect Investment Goals

While many advisors won’t recommend clients buy or sell digital currency, Boneparth said investors may come to his firm for advice on existing crypto allocations.

“Some people have amassed quite a lot of money in cryptocurrency,” he said. “And it’s my job to show them what the risks are, how that focus and that asset can impact their long-term goals and their portfolio.”

Boneparth said it’s important to know how owning a particular type of asset can affect your financial goals, especially “volatile assets” like cryptocurrency.

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