Darin Brockman

Darin has been studying Bitcoin since 2013 and actively investing in major cryptocurrencies since 2017. He has experience in diverse blockchain ecosystems and digital assets, including Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Web3. Darin brings an accessible, practical approach to empower clients to invest in this emerging asset class. He holds a Certification in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals.  

At Haddonfield Financial Planning, we are dedicated to guiding clients through diverse investment opportunities to support long-term financial goals. Cryptocurrency, such as Bitcoin and Ethereum, has gained attention as a potential component of a diversified investment strategy. Below, we explore the potential benefits of including cryptocurrency in a portfolio, focusing on its role as a complementary investment. This information is for educational purposes only and does not constitute investment advice. Please consult your adviser to determine if cryptocurrency aligns with your goals, risk tolerance, and financial situation. Potential Benefits of Cryptocurrency in Diversification Cryptocurrency may enhance a diversified portfolio by offering exposure to unique market dynamics and innovative technologies.

Uncorrelated Returns

Cryptocurrencies often move independently of traditional stocks and bonds, which are influenced by economic cycles. This low correlation may help a portfolio during market downturns, potentially improving risk-adjusted returns when combined with equities, bonds, and other assets.

Diversification

Some investors view digital investments such as Bitcoin, which has a fixed maximum supply of 21 million coins, as potentially offering diversification benefits. In theory, this limited supply could make Bitcoin behave differently than traditional currencies that may be subject to inflationary pressures. However, it is important to note that Bitcoin’s performance as an “inflation hedge” or “store of value” is unproven, highly volatile, and subject to significant uncertainty.

Exposure to Technological Innovation

Cryptocurrencies are built on blockchain technology, which powers advancements in decentralized finance, supply chain management, and secure data systems.

Accessibility Through Regulated Products

Spot Bitcoin and Ethereum exchange-traded funds (ETFs), approved by the U.S. Securities and Exchange Commission (SEC), offer a regulated and liquid way to gain cryptocurrency exposure. These vehicles integrate into traditional portfolios, simplifying access compared to direct ownership.

Cryptocurrency may be a tactical allocation within a broader strategy, enhancing diversification without overshadowing core holdings like stocks and bonds.

Next Steps

If you are curious about how a limited cryptocurrency allocation might fit into your diversified strategy, contact your adviser for a personalized review. We will evaluate its suitability based on your objectives and risk profile, ensuring alignment with your overall financial plan. Past performance does not guarantee future results, and all investments carry the risk of loss, including the potential loss of principal.

Investment Advisory Services are offered through Haddonfield Financial Planning, L.L.C. (“HFP”), an SEC registered investment adviser. Information presented is for educational purposes only and should not be rendered as providing investment advice. Past performance is no indication of future results. Investing in digital currency comes with significant risk of loss that a client should be prepared to bear, including, but not limited to, volatile market price swings or flash crashes, market manipulation, economic, regulatory, technical, and cybersecurity risks. In addition, digital currency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Volatility Risk

Digital currency is a speculative and volatile investment asset. Investors should be prepared for volatile market swings and prolonged bear markets. Digital currency can have higher volatility than other traditional investments such as stocks and bonds and market movements can be difficult to predict.

Economic Risk

The economic risk associated with digital currency is in the lack of widespread or continuing digital currency adoption. The market and investors could decide that digital currency should not be valued at the current market capitalization due to a variety of factors.

Regulatory Risk

Digital currency could be banned or highly regulated by governments that would deter investors from buying or holding digital currency.

Technical Risk

Digital currency is a dynamic network with a codebase that is updated to add new security and functionality features. The updated code that is merged by the core developers could potentially have an error that threatens the security or functionality of the digital currency network.

Cybersecurity Risk

Digital currency exchanges and wallets have been hacked and digital currency has been stolen in the past. This is a potential risk that clients must be comfortable with when investing and holding digital currency. Theft is less likely when holding digital currency at a qualified custodian in offline systems (cold storage) with institutional security and controls.

Digital Asset Service Providers

Several companies and financial institutions provide services related to the buying, selling, payment processing and storing of virtual currency (i.e., banks, accountants, exchanges, digital wallet providers, and payment processors). However, there is no assurance that the virtual currency market, or the service providers necessary to accommodate it, will continue to support Digital Assets, continue in existence or grow. Further, there is no assurance that the availability of and access to virtual currency service providers will not be negatively affected by government regulation or supply and demand of Digital Assets. Accordingly, companies or financial institutions that currently support virtual currency may not do so in the future.

Custody of Digital Assets

Under the Advisers Act, SEC registered investment advisers are required to hold securities with “qualified custodians,” among other requirements. Certain Digital Assets may be deemed to be securities. Currently, many of the companies providing Digital Assets custodial services fall outside of the SEC’s definition of “qualified custodian”, and many long-standing, prominent qualified custodians do not provide custodial services for Digital Assets or otherwise provide such services only with respect to a limited number of actively traded Digital Assets. Accordingly, clients may use nonqualified custodians to hold all or a portion of their Digital Assets.

Government Oversight of Digital Assets

The regulatory schemes - both foreign and domestic - possibly affecting Digital Assets or a Digital Asset network may not be fully developed and subject to change. It is possible that any jurisdiction may, in the near or distant future, adopt laws, regulations, policies or rules directly or indirectly affecting a Digital Asset network, generally, or restricting the right to acquire, own, hold, sell, convert, trade, or use Digital Assets, or to exchange Digital Assets for either fiat currency or other virtual currency. It is also possible that government authorities may take direct or indirect investigative or prosecutorial action related to, among other things, the use, ownership, or transfer of Digital Assets, resulting in a change to its value or to the development of a Digital Asset.