Michael Sonnenshein, investments director at cryptocurrency firm Grayscale, said people might be less anxious if they're not banking on just one cryptocurrency.
Fortunately, you don't have to: There are currently some 2,000 cryptocurrencies to chose from. And more investment firms are looking into establishing index funds for cryptocurrencies. For example, Grayscale is soon launching a "basket of digital currencies," in which investors' money will be spread across five digital currencies.
Diversifying is useful for another reason, Edelman said: "It's so early, we don't know which cryptocurrencies will survive."
Invest only what you can afford to lose
Tatar said people must restrict how much of their investments go to cryptocurrencies.
"You're seeing too many people jumping in and betting the ranch, and just saying 'yee-haw!'" he said. "They're not disciplined enough to realize they have to stay within their asset allocation models."
"Re-balancing" your investments is essential with cryptocurrencies, he said, because of their tendency to rapidly change value.
"If you've invested 20 percent of your portfolio into bitcoin, and all of a sudden you check and, lo and behold, your bitcoins have increased so much that they're now 35 percent of your portfolio, you can rebalance and go back to your asset allocation," Tatar said. "That should protect you from some of that volatility."
"You're seeing too many people jumping in and betting the ranch, and just saying Yee-Haw!"
It's not just the owners of cryptocurrencies who are stressed, Smigiel said. Recently, he finds himself consoling his clients who haven't bought any bitcoin, ripples or ethereum.
"We also see anxiety on the flip-side — the people who feel they are missing out," he said. "And so you're anxious either way."
Source: www.cnbc.com
