Nearly 45% of crypto investors say that portfolio diversification is the primary reason they hold the asset, according to a new report by the Urban Institute.
However, there are right and wrong ways to use digital assets like bitcoin for hedging risks.
Diversification is an important aspect of a sound portfolio that helps reduce investment risks.
According to Urban's report, 27% of investors believe crypto is the future, 11% think they will make more money in crypto, and 5% do not trust the U.S. dollar.
Crypto as an Investment Option
Crypto can be a good complement to traditional investments.
But investors need to be prepared for the high volatility of cryptocurrencies.
For investors looking to reduce risks, a 1%-2% investment in crypto may be a good allocation.
