Is Bitcoin a Good Investment? - NerdWallet (2024)

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Bitcoin, the largest cryptocurrency by market cap, is once again making headlines. After gradual gains throughout 2023, the dominant cryptocurrency hit new record highs in March 2024, rising above $70,000 for the first time.

But deciding if Bitcoin has a place in your portfolio requires looking beyond today's headlines. Bitcoin is a risky investment with high volatility, and generally should be considered only if you have a high risk tolerance, are in a strong financial position already and can afford to lose some or all of your investment.

If you choose to invest, it’s important to maintain a diversified portfolio that includes several different types of investments to reduce your overall risk exposure. As a rule of thumb, don't invest more than 10% of your portfolio in risky assets like Bitcoin.

» Learn more about investing in cryptocurrencies

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Investing in Bitcoin

Bitcoin pros

» Want to learn more? See the list of the best centralized crypto exchanges and platforms.

🤓Nerdy Tip

The Securities and Exchange Commission has officially approved a spot Bitcoin ETF. Learn what that means for Bitcoin and other cryptocurrencies.

Bitcoin cons

  • The price of Bitcoin can go up, as referenced above. It can also go down —a lot. In 2022, it fell more than 75% from its all-time high. Unlike traditional financial exchanges, crypto exchanges don't have circuit breakers, which automatically pause trading when prices dive too quickly. Crypto markets also trade 24/7, and dramatic dips can happen at any time.

  • Transactions are irreversible. People have lost millions of dollars of Bitcoin because they lost or forgot their wallet credentials.

  • Crypto exchanges lack basic consumer protections, like insurance protection from the Securities Investor Protection Corp. and the Federal Deposit Insurance Corp., found in traditional financial products.

What do financial pros say about Bitcoin?

Bitcoin is divisive. It's at once hailed as one of the biggest advances in finance in centuries and the biggest scam of all time. Here's what the experts on both sides have to say.

Warren Buffett

Famed investor and CEO of Berkshire Hathaway Warren Buffett is decidedly against Bitcoin, and for a very specific reason: He doesn't believe it has any utility. At the 2022 Berkshire Hathaway shareholder meeting, Buffett gave a lengthy example of how he'd gladly invest $25 billion for 1% of U.S. farmland or apartment complexes, considering they both have a purpose and generate money. But when it came to Bitcoin, he wouldn't buy all the Bitcoin in the world for $25, because he doesn't know what he'd do with it.

"I'd have to sell it back to you one way or another," he quipped to laughter from the crowd. "It isn't gonna do anything."

Fidelity Investments

Fidelity is among the largest asset managers in the United States, and is one of the few traditional brokers that offer cryptocurrency to their clients. In 2023, Fidelity introduced Fidelity Crypto, which lets clients trade Bitcoin and Ethereum, and the asset manager is also among those that received approval from the U.S. Securities and Exchange Commission (SEC) for a spot Bitcoin ETF.

In Oct. 2023, researchers at Fidelity released a report that concluded Bitcoin was "fundamentally different than any other digital asset" and that other digital assets were unlikely to improve upon Bitcoin, because it is the most "secure, decentralized, sound digital money."

"It is not that we think an allocation to bitcoin does not come without risks," the researchers wrote in the report, "but that we think some investors are overestimating the downside risks of bitcoin when compared to other digital assets."

Michael Novogratz

Michael Novogratz's credentials include former president of Fortress Investment Group and 11 years at Goldman Sachs (including as a partner beginning in 1998). He was also a member of the New York Federal Reserve's Investment Advisory Committee on Financial Markets, and is the founder and current CEO of crypto investment firm Galaxy Digital.

Novogratz has long been a supporter of Bitcoin, and as recently as Dec. 2023, Novogratz said in an interview with Bloomberg TV that he thinks Bitcoin could hit its previous highs, and correctly predicted that the SEC would approve a spot Bitcoin ETF.

"There's a bunch of good things happening to Bitcoin," he said.

🤓Nerdy Tip

If you're worried about keeping your crypto with an exchange, consider moving your digital assets to a separate crypto wallet. Most exchanges allow you to transfer assets to these wallets, which can be online (on a separate platform) or offline (on a thumb drive with added security features).

What kind of investment is Bitcoin?

After more than a decade in existence, there’s still debate over what kind of investment Bitcoin is. Owning Bitcoin is not like owning stock in a company. Unlike a business, Bitcoin doesn't generate revenue by selling products or services. It doesn't issue dividends. It also doesn’t have a CEO, board of directors or any other centralized group that sets goals or that can be held accountable.

In June 2022, SEC Chair Gary Gensler said on CNBC that some cryptocurrencies “have the key attributes of a security” while others, specifically Bitcoin, “are a commodity.”

Commodities are associated with raw materials like metal, grain and milk. Commodity markets are regulated by the Commodity Futures Trading Commission, which also regulates foreign currency trading and is the government agency most active in cryptocurrency regulation.

Still others say it’s a currency — something you can use to pay for goods and services. While there are businesses that accept Bitcoin, it’s far from being a widespread practice.

There’s also the possibility that it’s a new asset class altogether.

» Did you know? You can hold crypto in a Roth IRA

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Is Bitcoin a Good Investment? - NerdWallet (4)

Bitcoin and volatility

Bitcoin’s exponential growth and ability to maintain its title of most valuable cryptocurrency can mask the fact that its ascent has not been linear.

The upside of buying Bitcoin for a dime in 2010 is clear. But with volatility comes big downsides, too. Someone who bought Bitcoin in 2013 would have seen their investment tumble 80% — and it wouldn’t be above water for another three years. A decline in 2018 lasted about a year, and there were drops of 50% or more in 2021 and again in 2022.

Anyone investing in Bitcoin will hope for the best, but they should be prepared for big downturns, too. While Bitcoin has recovered many times, there's also a possibility that it could go to zero — for example, if several crypto platforms fail and there's a massive sell-off.

Neither the author nor editor held positions in the aforementioned investments at the time of publication.

Is Bitcoin a Good Investment? - NerdWallet (2024)

FAQs

Do you think Bitcoin is a good investment? ›

Edelman stresses that bitcoin is highly speculative, with a history of volatility, but he believes its potential makes it appropriate for a long-term portfolio, provided that investors limit it to 1% to 5%. "The risks are high, and if it fails, a low single-digit allocation won't cause material harm," he said.

Is Bitcoin worth investing in 2024? ›

Our most recent Bitcoin price forecast indicates that its value will increase by 13.46% and reach $69,892 by June 27, 2024.

Is it worth having $100 in Bitcoin? ›

Investing $100 in Bitcoin alone is not likely to make you wealthy. The price of Bitcoin is highly volatile and can fluctuate significantly in short periods. While it is possible to see significant returns in a short time, it is also possible to lose a substantial amount just as quickly.

How much will 1 Bitcoin be worth in 2025? ›

Add it all up and on average, Bitcoin has seen gains of a staggering 400% during these post-halving years. So, when measured from a projected starting price of $99,000 at the beginning of 2025, a 400% increase would push Bitcoin's price to nearly $500,000 by the end of next year.

What is the downside of buying Bitcoin? ›

Unlike a currency that's regulated by a central bank, Bitcoin transactions don't come with legal protection and are typically not reversible, which makes them susceptible to scams. Keep in mind that Bitcoin is taxed, so you have to report capital gains and losses on your annual income tax return.

What will $100 of Bitcoin be worth in 2030? ›

If Wood is correct and Bitcoin reaches $3.8 million, a $100 investment in Bitcoin today would be worth $5,510 in 2030. This translates to a compounded annual growth rate (CAGR) of over 95%. While the prediction is bullish, Bitcoin's 14-year CAGR is well over 220%, so it is not entirely out of the question.

What will Bitcoin be worth in 10 years? ›

CRYPTO: BTC

Cathie Wood, the founder, chief executive officer, and chief investment officer of ARK Invest, believes that Bitcoin could be worth $1 million per coin before 2030, as adoption by institutional investors increases. Whether Wood's prediction materializes remains uncertain.

What will Bitcoin look like in 5 years? ›

Investors considering the long term should see two halvings over the next five years. The next one will occur sometime in 2028 and reduce mining rewards to 1.5625 Bitcoin. Think of it like this: Bitcoin mining rewards will only be a quarter of what they are today within the next five years.

Will Bitcoin be worth anything in 20 years? ›

Max Keiser predicts Bitcoin to be worth $200K in 2024. Fidelity predicts one Bitcoin will be worth $1B in 2038. Hal Finney predicted $22M per Bitcoin by 2045.

Is it wise to buy Bitcoin now? ›

Bitcoin is more stable than it's been in years, and the next halving is fast approaching. Taking current market conditions into account, now might well be the perfect time to invest, so long as you remain cognizant of the risks. But if you opt to jump into the market …

How much will $500 of Bitcoin be worth in 5 years? ›

If I invest $500 in Bitcoin at the start of 2022, how much money will I expect in the next 5 years? I see Bitcoin hovering around $90k by the mid of 2022, if not the entire market is collapsed by that time. In 5 years Bitcoin can easily reach $150k-$250k.

What if I invest $100 in Bitcoin 5 years ago? ›

Thus, a mere $100 stake in Bitcoin five years ago, when it was trading at around $7,000, would have resulted in an immediate 50% crash as the digital coin fell to $3,500 in early 2019.

Should I sell or hold Bitcoin? ›

You might want to sell your crypto under some specific circumstances. If there is a lack of blockchain development progress or a string of negative news, you might want to sell your cryptocurrency. If you've reached your investing goals or want to reallocate your holding, you might want to sell your cryptocurrency.

Is it smart to invest in Bitcoin? ›

Sarathy concurs that there are risks involved with investing in these cryptocurrencies, including price volatility, cybersecurity concerns and a lack of regulations compared to traditional currency. Ultimately, it's up to each individual user how much risk they want to take.

How high can Bitcoin realistically go? ›

Projecting a 10-year growth in a volatile asset like Bitcoin seems a far-stretched notion. However, the BTC price is expected to cross $300,000 by 2030. With global adoption, a single Bitcoin could be worth a million dollars.

Is Bitcoin safe to invest in? ›

Compared to other asset classes such as stocks and government bonds, investing in cryptocurrency can be considered very risky. While cryptocurrencies are generally seen as legal across Europe, many aspects of cryptocurrency remain unregulated—or may be subject to shifting regulations.

Does Bitcoin have a future? ›

“Looking into 2024 and beyond, I'm personally very long-term bullish on bitcoin,” Sciberras says, citing the macroeconomic backdrop, April's halving event and the improved development of scalability within the Lightning network as well as BTC spot ETFs. However, bitcoin's future isn't without potential hurdles.

Why should I choose Bitcoin? ›

Bitcoin has a limited supply

This makes Bitcoin a scarce commodity, which is a big part of why it is valuable. By comparison, fiat currencies like the dollar have an unlimited supply. While the purchasing power of the dollar decreases year after year, the value of Bitcoin continues to increase.

Can Bitcoin go to zero? ›

A reasonable assumption that Bitcoin could hypothetically reach the null state of it's value is worth the thought. Even-though such an event is very less likely to take place, there are some factors that could theoretically lead to Bitcoin price crashing to zero.

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