The question of how much to invest depends on many factors:

1. how much liquid wealth you have in the form of stocks bonds and cash
2. whether you own a home
3. whether you have a stable income from a job
4. risk tolerance of the investor and emotional makeup

Lets make some assumptions for investor A
1. $100K portfolio of which $40K is stocks, $20K bonds and $40K in cash
2. $85K in home equity
3. stable job at a utility company, earns $40K a year  

I would argue Investor A could invest 5% to 10% of his liquid wealth into crypto and not worry too much about the 100% annualized volatility or $5,000 to $10,000.

Now investor B has an the same wealth, but double the income at $80K. Arguably this investor can replace losses faster so they can invest at least 5% more than investor A.