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Investors are facing a number of challenges right now. Tariffs, sticky inflation and uncertainty regarding monetary policy are rattling the stock market. On top of that, the crypto market has also felt the pressure, as digital asset prices have struggled to keep up with the momentum they had earlier this year.
In this kind of economic environment, investors may be wondering how to adjust their strategy and if they should add digital assets to their portfolios. Bankrate’s First-Quarter 2025 Market Mavens Survey asked experts if there is a place in individual investors’ portfolios for crypto. Their answer: Nope. Generally speaking, experts agreed that there isn’t a need for crypto in most investors’ portfolios.
For context, cryptocurrency prices have been fluctuating recently. Optimism in the crypto industry following the reelection of President Donald Trump sent crypto prices soaring from November to January.
Trump’s executive order creating the Strategic Bitcoin Reserve in March gave crypto prices another boost, but not for long. The excitement waned when it was announced that the reserve would only hold bitcoins that were forfeited as part of criminal investigations. Investors had been expecting more than just repurposed, forfeited assets.
This recent wild ride is just one of the reasons experts advise steering clear of crypto.
“Cryptocurrency is a complicated asset for individual investors’ portfolios as [it] doesn’t generate income and is highly volatile,” says Dec Mullarkey, managing director, investment strategy and asset allocation at SLC Management. “The swings in value can be dramatic, which makes it more of a speculative asset. If an investor wants to include it in their portfolio, they should limit its size or appreciate that it could materially negate the performance of more traditional asset classes.”
Forecasts and analysis:
This article is one in a series discussing the results of Bankrate’s First-Quarter 2025 Market Mavens Survey.
Experts say crypto is still a speculative asset
It helps to understand why crypto prices can rise and fall so quickly. Cryptocurrencies generally don’t have intrinsic value, like many other assets, including stocks, do. This means crypto prices are solely based on what others are willing to pay for a coin, leaving the asset susceptible to dramatic price swings.
Here’s a recent example. In January, Bitcoin hit an all-time high of $109,000, bolstered by Trump signing an executive order that established a working group responsible for proposing digital asset regulations. Since then, as of this writing, Bitcoin is down more than 20 percent from its all-time high.
This type of price swing isn’t unusual for Bitcoin, and it’s representative of just how fast crypto prices can rise and fall in a given period of time.
Bankrate asked the Market Mavens Survey participants this open-ended question: “The Trump administration has embraced aspects of cryptocurrency. Is there a place for this would-be asset class in individual investors’ portfolios? Is it any more than a speculative asset?”
Specific responses from participants varied, but one thing was clear: Crypto is a complicated investment that is not for everyone.
“It is still a speculative asset class, since it generates no earnings, pays no dividend, and is not used in industrial applications, nor worn as jewelry,” says Sam Stovall, chief investment officer at CFRA Research. “Its value is dependent on what the other investor is willing to pay.”
That said, one respondent did note that crypto, in some cases, could play a similar role as gold in portfolios, but only to a certain extent. Additionally, another respondent noted that crypto is potentially suitable for aggressive investors.
“Crypto is like gold, in that the only benefit they provide to a portfolio is uncorrelated returns, making the portfolio more efficient over a sufficient time horizon,” says Jon Brager, portfolio manager and managing director at Palmer Square Capital Management. “I would personally limit exposure [to] gold and crypto to a small (<5 percent) position in any portfolio. And the only crypto asset I would consider owning would be bitcoin, nothing else.”
Investors should take a long-term approach with their portfolios and think about what financial goals they’re trying to achieve, rather than trying to make quick gains via crypto exposure. Saving for something like retirement is a long-term game, not a get-rich-quick scheme.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
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