Ric Edelman Says Advisors Should Treat Crypto Like Tech Stocks

With the crypto market in freefall, hundreds of financial advisors joined Ric Edelman in what he called an “urgent” dose of online reality regarding their crypto holdings and what they should tell clients.

Edelman, founder of the Digital Assets Council of Financial Professionals, told advisers in a webinar on Monday that it’s critical they put cryptocurrencies into context. Yes, bitcoin is down about 70% year-to-date, but it’s been up sevenfold since 2018, the advisor guru said.

“You wouldn’t sell the Nasdaq even if it crashes. So you own bitcoin for the same reason you own the Nasdaq,” Edelman said.

“I don’t hear anyone telling investors they can’t put Netflix in a 401(k),” he said. Netflix’s biggest one-month drop was 53% in November 2021, compared to Bitcoin’s 42% one-month drop in June.

Other stocks, such as Peloton, Carvana and FuboTV, saw larger year-on-year declines than bitcoin, Edelman said. Peloton and Carvana both suffered losses of 91%, while FuboTV’s share price fell 90%.

“I’m willing to bet your clients who own bitcoin lost more money on Facebook,” added Edelman, who recommended advisors and investors hold no more than 1% of their assets in crypto.

For those who lost big on Bitcoin and Ethereum, Edelman reminded advisers that cryptos are not securities and therefore not subject to the wash sale rules. This means that investors can sell their losing cryptos, reap the losses for tax purposes, and redeem bitcoins and ethereum immediately, without waiting 30 days to redeem them.

Regarding the demise of blockchain and decentralized finance, Edelman reminded advisers that Uniswap, a decentralized platform that facilitates investor-to-investor transactions without any centralized third parties, is now bigger than the stock exchange. from New York.

Mastercard’s CEO recently warned that the SWIFT system won’t exist in five years and will be replaced by blockchain technology, Edelman said.

JPMorgan has started using blockchain for transactions and Fidelity and Citigroup have hired thousands of workers to take full advantage of blockchain technology and cryptocurrency opportunities, Edelman said.

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