Cryptocurrencies were on watch as the Federal Reserve kicked off its two-day meeting Tuesday.
The potential end to stimulative monetary policy has cast a pall over the space in recent months.
Bitcoin rallied Tuesday but remains below the psychologically important $50,000 mark and well off its highs closer to $70,000 set in November.
CNBC’s “Trading Nation” asked its traders how they’re positioning their portfolio to best gain exposure to the crypto space heading into 2022.
“I would be buying right now,” Mark Tepper, president of Strategic Wealth Partners, said Tuesday. “I’m a big believer in crypto, I own some, but I’m also a realist. And I think if you want to successfully own or trade crypto … you own it in a percentage that allows you to sleep at night.”
For Tepper, that equals roughly 10% of his liquid net worth, an amount he says allows him to feel comfortable if he loses it all but “elated” if it rallies tenfold.
“I think you need to understand that crypto skyrocketed from the depth of Covid because of all that new liquidity that flooded the system, all those [stimulus] checks. That’s no longer a catalyst, so gains in the future are going to be much, much slower,” Tepper said.
In an email to CNBC, Tepper noted that he’s allocating 50% of his cryptocurrency position to ethereum, 40% to bitcoin and 10% to a lesser-known crypto, polkadot.
“100% of my new crypto money right now is going into polkadot. Not a lot of people have heard of that one,” he said. “The founder of [the platform] Polkadot was also a co-founder of Ethereum … He basically took Ethereum’s technology and made it better. So that’s where my money is going right now.”
Todd Gordon, founder of Inside Edge Capital Management, says recent weakness in cryptocurrencies is likely tied to a tech sell-off and less liquidity in the system. However, he sees crypto adoption among older and establishment investors as a broad positive that should offset those kinds of downswings.
Like Tepper, Gordon is bullish on the space and has 3% exposure to cryptocurrencies in his portfolio — that consists of 56% bitcoin, 35% ether, 5% solana and 3% cardano.
“If you want to find a good way to look at perhaps the difference between ethereum and bitcoin — this is an old foreign exchange trick — you look at the cross rates, you look at ethereum versus bitcoin, you take the dollar out of it,” Gordon said during the same interview.
Ethereum relative to bitcoin has weakened but recently found support at current levels. If it can hold that support level, Gordon sees the potential to add to his position in ethereum.