Edelman: Crypto Should Replace Bonds in Modern Portfolio Mix

Financial advisor Ric Edelman declared the traditional 60/40 portfolio allocation "dead and obsolete" during a Tuesday webinar, recommending investors allocate between 10% and 40% to crypto assets instead of relying heavily on bonds.

The recommendation represents a shift from conventional portfolio construction, where investors typically hold 60% stocks and 40% bonds. Edelman's proposal comes as crypto assets gain institutional acceptance through exchange-traded funds and regulatory clarity.

According to the webinar presentation, the new allocation model should include 70% to 100% in stocks and crypto combined, with only zero to 30% in bonds, driven by unprecedented longevity and technological advances that require portfolios to generate higher returns over longer time horizons.

Longevity Drives Portfolio Shift

Edelman, founder of the Digital Assets Council of Financial Professionals, said conservative investors should allocate 10% to crypto, moderate investors 25% and aggressive investors 40%. The recommendations stem from projections that people alive in 2030 "are likely to live to age 100 and beyond.”

"We must update the 60/40 glide path," Edelman said during the webinar. Traditional retirement planning assumes clients die by age 85 or 90, making portfolios appear adequate, but extending those projections to age 100 or 105 reveals a different reality.

"Rerun those projections, assuming the client lives to 100 or 105. Guess what's going to happen. It'll blow up on them. They will run out of money before they die," he said.

The crypto allocation recommendation centers on Bitcoin as a "store of value" similar to gold. Edelman projected Bitcoin could reach $500,000 by 2030, citing supply and demand imbalances where institutional buyers purchased 95,000 Bitcoin in the first quarter while only 41,000 new coins were produced.

Crypto ETF Access Drives Adoption

Anthony Bassili, president of Coinbase Asset Management, noted that crypto ETFs have simplified access for advisors, with nearly 2,000 publicly traded companies now holding Bitcoin ETFs in their portfolios. "The movement away from 60/40 has been around forever, and now we're saying crypto should be a part of that allocation as well," Bassili said.

The webinar highlighted regulatory changes under the current administration that reversed previous restrictions on crypto custody and trading by banks and broker-dealers. Edelman noted that letters from the Office of the Comptroller of the Currency, Federal Reserve and Securities and Exchange Commission that previously prohibited banks and broker dealers from trading or custody crypto were all rescinded this year.

The presentation emphasized recent legislative victories, including the GENIUS Act creating stablecoin legislation that was “signed into law" after passing both the House and Senate. Bassili said the Clarity Act, which provides "rules of the road for who will regulate" crypto assets, is advancing quickly in the Senate and will designate the Commodity Futures Trading Commission as the primary regulator for most digital assets.

Edelman also highlighted the reversal of a 2022 Department of Labor stance that threatened to investigate employers offering Bitcoin in 401(k) plans. "Over the next year, you're going to see 401(k)s all over this country making Bitcoin available to their workers," he said, following the May rescission of the restrictive guidance.

Edelman argued that advisors avoiding crypto allocations are "essentially shorting the market" since crypto represents 3% of total market capitalization across stocks, bonds and digital assets. He said portfolios including Bitcoin show improved risk-reward metrics through better Sharpe ratios and lower correlation with traditional assets.