5 harsh realities of investing in crypto

• Concerns surrounding Trump’s Crypto Strategic Reserve have investors worried.
• Holding crypto can diversify your portfolio, but there are risks to consider.
• For one: You probably won’t get rich owning bitcoin.

There’s trouble in paradise for crypto traders.

Despite soaring to new highs at the end of 2025, at the time of this writing bitcoin (BTC) has dropped over $9,800 (10%) in the past month, while ether (ETH) has fallen $543 (19.92%).

Crypto hit a bump in the road after President Donald Trump announced his plans for a “Crypto Strategic Reserve” on March 2.

The initial optimism surrounding the reserve turned sour with the inclusion of solana (SOL), cardano (ADA), and ripple (XRP) alongside bitcoin and ether. Investors are concerned about including these less popular cryptocurrencies — many wanted only bitcoin or only bitcoin and ether.

The crypto buzz is high, but so is the risk. Even if you’re using one of the best crypto exchanges, there are some harsh realities of investing in crypto.

1. You won’t get rich quick with bitcoin

If you expect bitcoin to make you rich, you are setting yourself up for disappointment. While some early investors got lucky buying before bitcoin skyrocketed, that’s not the reality for most.

“Just because it had a fantastic year in 2024 doesn’t mean it won’t have a big draw down or pull back as it did in 2022,” Craig Robson, founding principal and managing director at Regent Peak Wealth Advisors, told Business Insider. “So, for investors, it has to be suitable for them.”

Even if your cryptocurrency assets remain in the green for a full year, the accumulated gains won’t be life-changing unless you invest a large sum of money from the get-go.

Let’s say you bought bitcoin in March of last year when it was valued at around $67,000, making a one-time $1,000 investment. A year later, your bitcoin would have nearly doubled in value, increasing by $888.97 ($1,888.97 total value). This upturn, while notable, isn’t guaranteed long-term.

Receiving a life-changing bitcoin return would require a huge investment upfront, which is both unrealistic for most people and extremely risky.

“Everyone says that they can handle volatility when times are good. When things aren’t good, I call it your pain threshold,” said Robson. “Upside volatility is great, but the knife cuts both ways.”

2. The future is impossible to predict

Despite crypto’s increasing acceptance and ongoing regulatory efforts, its long-term growth is uncertain. Unlike traditional assets, its value is driven solely by supply and demand.

Financial advisors recommend investing only what you can afford to lose, especially when buying something as risky as crypto.

“You shouldn’t put your entire retirement estate or emergency fund in crypto,” Nick Holeman, director of financial planning at Betterment, told BI. “But if you want to invest 5% of your portfolio into bitcoin or something similar, that’s OK. In moderation, it is fine.”

Diversification helps your portfolio benefit from exposure to a range of different market sectors. Spreading your money across different types of investments allows your portfolio to benefit from the success of certain industries while limiting the impact of downturns in others.

“It’s always good to be cautious and conservative to protect your downside,” Jessica Billingsley, managing partner at Amata Capital, told BI. “Nobody knows how markets move, and anyone who claims they do are making things up.”

3. Crypto isn’t a currency

Despite “currency” being in the name, cryptocurrency is more of an investment opportunity than a medium of exchange.

The original idea behind bitcoin was that it would be a decentralized alternative to traditional fiat money and would eliminate the need for intermediaries like banks or financial institutions. Although a few retailers, like Shopify and Microsoft, accept bitcoin as payment, most places don’t since not everyone believes in its value.

As crypto functions now, it is better used as a speculative investment rather than a means of purchasing goods and services. A majority of crypto-enthusiasts don’t use bitcoin as a currency, with over 92% of crypto holders in an FDIC survey saying they consider it an investment opportunity rather than a currency.

Cryptocurrency may gain wider acceptance over time, but it’s not a mainstream currency yet.

“Years from now, it would not surprise me if more and more people would be using bitcoin as a form of monetary currency for digitized payments,” said Robson.

Compare Today’s Rates

4. You might need professional help

If you’re asking questions like “How much of my portfolio should be in crypto?” and “What are the tax implications of owning bitcoin?” you may need the help of a financial advisor.

Bitcoin has its own trading rules, online storage options, and risks. While there’s a lot of helpful information online, it can be overwhelming for investors just getting started, especially if they are not tech-savvy or have limited market trading experience.

“The best thing for someone not experienced in this space is to use a trusted custodian,” Billingsley said. She explains that starting alone can be tricky, particularly for those unfamiliar with blockchain technology.

“Your financial advisor would be able to have that oversight,” Kristen Mirabella, head of partnership at Eaglebrook, told BI. “They could talk to you about the size of your investment, how it relates to the rest of your portfolio, just like they would any other asset.”

5. Crypto may not be right for you

Anyone can invest in crypto, but that doesn’t necessarily mean you should. Most people either cannot afford it, do not want to risk a significant loss, or do not trust it.

Despite being a highly debated topic continuously featured in news feeds and dinner table conversations — especially as the new administration rolls out new policies and regulatory practices — most US investors don’t own crypto. Pew Research found that only about 17% of US investors have invested in or held cryptocurrency, with a majority being men under 50.

Technically, you may miss out on potentially high gains by not owning crypto. But you’re also avoiding a potentially large loss.

The bottom line is that you shouldn’t invest in crypto, or any asset, if you don’t feel comfortable holding it. “Like anything, it’s important not just to jump in and follow the trend,” Billingsley said. “Do your own research and learn for yourself.”