Should you invest in Bitcoin in 2025?

Bitcoin (Bitcoin against the dollar) had an amazing run this year, rising to More than $100,000Some analysts expect it to break even Higher next year. While this may tempt you to consider investing in it, financial advisors remain cautious about recommending cryptocurrency to clients and suggest allocating only a small portion of your portfolio to it.

in spite of Federal Reserve (Federal Reserve) latest forecasts about Fewer interest rate cuts Next year saw Bitcoin prices decline, but they doubled this year. If the Fed slows the pace of interest rate cuts, Treasury yields will remain high and attract more investors compared to riskier assets like Bitcoin.

Experts advise caution when investing in Bitcoin

Asset manager Blackrock recently suggested that 1%-2% Bitcoin exposure in a portfolio is a “reasonable range.”

While it is important to note that Blackrock operates the largest spot Bitcoin ETF, the iShares Bitcoin Trust (Ebit), some advisors also agree that there is a limited allocation to Bitcoin.

“If the price does go up…it will still add meaningful outperformance to the portfolio,” said Malcolm Etheridge, an analyst. Certified Financial Planner (CFP) and Managing Partner of the Capital Region Planning Group. “But if it doesn’t deliver on its promise, and the price drops to zero, it won’t completely eliminate them either.”

Bitcoin is a very volatile asset, and having only a small investment can mean limiting downside.

“This should be viewed as outside of core investments because they are very volatile and you could lose a significant amount of money,” he said. David Rosenstruck, CFP and founder of Wharton Wealth Planning.

Scott Sturgeon, CFP and founder of Oread Wealth Partners, advises people to think about why they want to invest in Bitcoin.

“If you want to invest in it because you see it as an uncorrelated asset or a hedge against inflation, then that might be a justification for the investment,” Sturgeon said. “Conversely, if you want to buy it just because its price is up 120% year-to-date, I might suggest that you are just chasing returns and are speculating more than investing.”

Should you buy Bitcoin, choose an ETF, or consider using a dealer?

If you are convinced that investing in Bitcoin is the right choice for you, you need to decide how you want to invest your money in it. Your options include buying cryptocurrency directly, investing in ETFs or Bitcoin funds or buying shares in Bitcoin-related companies.

Douglas Boneparth, CFP and president of Bone Fide Wealth, educates his clients about cryptocurrencies but does not solicit investments. He personally started investing in Bitcoin in 2024 and prefers investing directly in Bitcoin versus investing in Bitcoin. Spot ETFs Or a stock like MicroStrategy (MSTR), which is a Bitcoin holding company Cryptocurrency agent.

“I’m a purist and I believe that if you’re going to own bitcoin, the best way to do it is by owning the cryptocurrency itself and storing it in a hardware wallet,” Bonebarth said. “In terms of Microstrategy, you’re basically buying leveraged bitcoin — they load their balance sheet with bitcoin and use a lot of debt to go out into the open market and buy it… You’re buying a riskier bitcoin asset.”

However, for investors new to crypto, advisors say spot ETFs could be a better option. This way you won’t need to Bitcoin wallet To hold cryptocurrency and can conduct ETF transactions through your brokerage account. Although, just make sure to pay attention to the fees.

“If you’re new to this and you’re a long-term investor, using ETFs makes it relatively easy,” Sturgeon said.