CRYPTO ─ The Cryptocurrency Market begins to show signs of recovery from its sharp decline in the 2nd quarter of the year. In fact, its flagship coin, Bitcoin (BTC), lost more than 50% of its value in a span of two months during this period. However, when the 3rd quarter officially began in July, the momentum seemed to have shifted away from the continuous decline. BTC, for example, has shown signs of strength as it closed above the dreaded $20,000 level. 

Therefore, one could argue that the market is already preparing for a rally that could come later this year. With this in mind, the prospect of the crypto market seems to be brightening up, and thus the idea of crypto being a viable tradable investment could present an opportunity for those that are willing to take on more risk in exchange for a possible outlier or “big winner” in their respective portfolios. In addition, earlier this year, some of the most prominent fund managers, such as Vanguard, started to roll out a type of retirement fund that includes blue chip crypto projects and blockchain ventures.

Now, education/college funds are following the trend, and we could start to see some enticing options sooner rather than later. So, let’s explore how you could capitalize on this opportunity and whether you should consider this or not.

Three Things to Consider Before Taking the Path

1. Do your Due Diligence

Since crypto projects remain highly speculative; you need to be cautious and do your due diligence in researching the prospective crypto projects you intend to put your hard-earned money into. Furthermore, sticking to primary coins such as Bitcoin and Ethereum to build the bulk of your crypto allocation and only transacting with well-known and reputable crypto exchanges such as Binance and Coinbase would ensure a solid base to steer you away from too much risk.

2. Only invest small

Despite the recent rebound of the market, the fact remains that crypto is one of the riskiest assets you could invest in. An allocation of less than 10% would be ideal to ensure you are not taking an unnecessary immense risk for your child’s future.

“You don’t want to gamble your child’s ability to go to college on a speculative bet,” said Ric Edelman, Founder of the Digital Assets Council of Financial Professionals and a renowned Financial Advisor.

Howard Greenberg, President of the American Blockchain and Cryptocurrency Association, also added, “You should have limited [cryptocurrency] exposure. It should not be the majority of your portfolio because of its volatility.”

3. Time Horizon Matters

Because of the high volatility nature of crypto, it would be unwise to consider investing over a short time frame. As we have illustrated earlier, even the flagship coin, BTC, can lose half of its value in two short months; thus, to weather this volatility, make sure to have a long-term horizon of at least five years or more. 

A New Era of Possibilities and Risks

According to a recent poll by a well-known online magazine, Intelligent.com ─ an astonishing 87% of the parents who are currently saving for their children’s college fund have revealed that they have previously invested or have been investing in the cryptocurrency market in hopes that this would supplement their capacity to send their kids to tertiary level. 

The allure of the high returns the market has enjoyed for the past few years have certainly captured the interest of these parents. However, it is especially crucial to be prudent as your child’s future is at stake.

Disclaimer: This article is only for educational purpose. This is not investment advice or financial planning advice. We are not registered investment advisors. Always consult with a registered investment advisor before making any investing decisions.