Next Gen Investing

Kevin O'Leary says his crypto holdings today are 'almost at 10%'—here's how he decides which to invest

Kevin O'Leary on the set of Shark Tank.
Christopher Willard | Disney General Entertainment Content | Getty Images

During a Reddit Talk session on Thursday, "Shark Tank" investor Kevin O'Leary said that his cryptocurrency exposure is near 10%.

"I've grown the portfolio remarkably," O'Leary, chairman of O'Shares ETFs, said. "At the beginning of the year, I was at 3% weighting. The target was to get 7% by year-end. However, because of the appreciation of so many of the assets I have now, we're almost at 10% today."

His holdings include many digital coins, but also products in the space, such as companies building decentralized wallets, O'Leary said. "So, we're going to end up at the end of the year with a very significant holding in crypto assets, and it's not just bitcoin."

O'Leary declined to disclose all of his holdings, but noted that he owns bitcoin, the largest cryptocurrency by market value; ether, the second-largest and native to the Ethereum blockchain; and USD Coin, a stablecoin among the top 10.

Though he admits he owns "a lot of Ethereum," O'Leary does believe in some of its competitors, he said.

"Some people think the game is over and Ethereum is it, but I don't agree. There are many other alternatives, whether it be Solana or anything else," he said. "If you're an investor like I am, you want diversification. That's the key."

In particular, when determining which cryptocurrencies to buy, O'Leary analyzes the software behind each, he said.

"I am a software investor," O'Leary said. "I am going to put an allocation into the software of crypto because I believe it will change and be disruptive to a lot of different markets all around the world."

Rather than analyzing "the pros and cons of bitcoin or another coin," O'Leary said he asks himself the following: "Can I identify the best teams? Who are the best developers? How do I invest in them? What ledger is that? Should I own a piece of that, too?"

"That's how I'm looking at it," he said.

Similarly, billionaire investor Mark Cuban, co-star to O'Leary on "Shark Tank," also determines whether to invest in cryptocurrencies based on their utility.

"We're seeing a rush where there's a lot of different blockchains that are competing," Cuban said on a recent episode of the Next with Novo podcast. "When they start to put smart contracts to work, that's when we'll start to see things really level out. It's going to come down to applications and integrations."

However, it's important to remember that all cryptocurrencies come with risks due their volatile and speculative nature. Financial experts warn that investors should only invest what they can afford to lose.

For O'Leary, "some level of diversification is the key here. And I'm going to be reflecting that in how I invest."

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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