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“Shark Tank” investor Kevin O’Leary suggests that you should not invest more than 5% of your portfolio in Bitcoin and more than 20% in the entire cryptocurrency sector.
“Don’t put the farm onto any one stock,” O’Leary said during a Wired Q&A released on Oct. 3. “In other words, don’t bet everything ever. My diversification strategy was taught to me by my mother. Never more than 20% in anyone’s sector, including crypto. Never more than 5% in any one’s stock or bond.”
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O’Leary’s remarks came in response to a question from a viewer about the rationale for investing in Bitcoin. He said people did not have to invest in the leading digital asset. Still, he explained that he was an investor because he believed in the asset and digital payments.
“I do invest in Bitcoin ’cause I’m a believer in crypto and a believer in digital payment systems over time,” he said. “We have 11 sectors in the S&P, including real estate, which was recently added; it’s the most recent. Crypto is not yet a sector, but I believe it’ll become the 12th.”
Meanwhile, O’Leary’s cryptocurrency investment strategy also includes infrastructure plays. In May, he told CoinDesk that he held Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD) stock.
“No matter what crypto is doing, up or down, the exchange is making money because it’s the infrastructure,” he said at the time.
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O’Leary also said that he preferred stablecoins for yields over bank deposits. All of these, however, fall within his 20% allocation for the cryptocurrency sector. At the time, he told CoinDesk that he had 19% exposure to cryptocurrencies, just below the threshold.
Meanwhile, O’Leary last month urged investors seeking direct cryptocurrency exposure to stick to Bitcoin and Ethereum, warning against “irrelevant” tokens.
“You could own Bitcoin and Ethereum, and you would capture more than 90% of the alpha or price volatility of the entire crypto market,” he said.
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Still, in 2022, O’Leary told CoinDesk that he owned 32 cryptocurrencies, including Solana and Polygon. He said at the time that he was interested in projects with utility and did not dabble in memecoins.
