Crypto allocations should be capped at 5% of a diversified portfolio

A reasonable starting point for crypto allocation is 1% to 5% of a diversified portfolio. This limit applies once an investor has a fully funded emergency fund and has paid off high-interest debt. For many, this means investing only what can be afforded to be left untouched for three to five years. The strategy focuses on assets with track records and institutional support, specifically bitcoin and ethereum. To enter the market, investors typically open accounts at crypto exchanges or platforms. The IRS classifies cryptocurrency as property. Consequently, buying, selling, exchanging, or spending crypto on goods and services are taxable events.