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The part that scares me the most is that my friend has put all his resources into this one asset. If am wrong please correct me. Thanks
If you're sure about the investment and planning to hold long term, I don't see a problem.
I'm an "all eggs in one basket" kind of guy myself and see diversified portfolios as a sign of uncertainty in an investment.
Is it risky? Yes. Is it substantially riskier than diversification? It depends. If you buy ten or twenty different cryptocurrency projects, that's very poor diversification and actually increases the risk of losing money with each project added.
If you diversify into other asset classes, like precious metals, real estate, etc., that's true diversification - and it's safer.
Now, we're talking about investment money - this does not include your overall wealth, which may already consist of assets from other classes.
I would never go "balls deep" into anything without having much else to fall back on.
/Over&Out.