London Daily

Focus on the big picture.
Monday, Oct 27, 2025

Bitcoin for beginners: Here's what to know before you invest in crypto

Bitcoin for beginners: Here's what to know before you invest in crypto

Let's be honest, the advice to "invest in what you know" is hard to heed when you're trying to build a diverse portfolio.

So even if you're someone who can't define blockchain to save your life, you still may be wondering if you should have at least a little exposure to crypto in your portfolio.

After all, institutional investors and big banks have started taking it seriously. And it's hard to miss news of the meteoric rise in prices for bitcoin and other digital currencies over the past several years.

Had you bought bitcoin in early April 2017, for example, you could have seen a 3,700% return in just four years.

But there also have been plenty of price plunges along the way. If you'd bought in mid-April of this year, you would have lost more than half your investment in just four months.

So if you're tempted to invest, here's what to consider before taking the leap.

It is a highly speculative investment


Generally speaking, there is no intrinsic value underlying most cryptocurrencies.

Unlike a stock, for instance, they don't track the growth potential of a real-world company selling real-world products and services. Nor do they track the value of a natural resource the way a traditional commodity does.

(One exception are so-called stablecoins such as tether, USD Coin and binance USD. These are cryptocurrencies pegged to the value of the US dollar, euro and other forms of fiat money, which make them less volatile than non-pegged cryptocurrencies.)

Also, none are accepted as legal tender anywhere, except in El Salvador, which in early September adopted bitcoin as a national currency alongside the US dollar.

So by investing in a digital currency today, "your sole source of a return is betting that someone else will be willing to pay more for [it] in the future than you did," said Minnesota-based certified financial planner Matt Elliott.

That might be a fair bet given growing mainstream interest in crypto, especially with some of the bigger currencies like bitcoin, which has a market cap worth nearly half the total crypto universe, according to Charles Schwab.

But it's just as fair a bet to assume that many crypto currencies will flame out, much the way so many companies did in the dot-com era, noted New York-based chartered financial analyst Ryan Sterling.

"On the upside, we could see a 10x return in the next five years. That said, we would not be surprised if they were worthless in five years," he said.

Don't bet what you can't afford to lose


While he's not a huge fan of crypto, Sterling sees it as something that, in very small doses, might help clients get more diversification, since it performs so differently from stocks and bonds.

Sterling advises interested clients to invest no more than 2% of their liquid portfolios in digital currencies. In other words, they should only invest a small percentage of the money they have above and beyond their home equity and their retirement and education savings.

"By investing 2% they feel like they're participating, but not so much that it creates problems," Sterling said.

Elliott suggests having no more than 5% of your overall portfolio dedicated to speculative investments of all kinds, including crypto, but only if you have little to no debt and are willing to accept the risk of losing what you put in.

Arizona-based certified financial planner Christine Papelian thinks direct exposure to crypto is too volatile for her clients, who are primarily investing for retirement

But she said she reminds clients that they may already have some indirect exposure to crypto assets through investments in tech companies that invest in blockchain technology, which makes it possible for the crypto trading universe to function. Or investors may have exposure through actively traded mutual funds and exchange-traded funds, which themselves may have crypto or crypto-related companies, like Coinbase, in their portfolios, Papelian said.

There are very few protections


Another factor to consider: Direct ownership and transactions with crypto assets are mostly unregulated and offer very little consumer protection.

"We just don't have enough investor protection in crypto finance, issuance, trading or lending. ...[I]t's more like the Wild West...This asset class is rife with fraud, scams and abuse in certain applications," SEC Chairman Gary Gensler noted in written Congressional testimony.

The rules for how to report and pay tax on crypto assets are also in the very early stages. But the regulations that currently exist get particularly cumbersome if you ever decide to buy something with the crypto you own.

Rules and regulations are likely to increase in the foreseeable future. And that could affect prices positively or negatively.

Easier ways to get exposure


Unless you're comfortable with buying a cryptocurrency directly and storing it in a secure digital wallet, there are easier ways to get access.

Sterling typically invests his clients' money in bitcoin and Ethereum trusts run by Grayscale, currently the world's largest digital currency asset manager.

If you're not working with a financial adviser, you also can get indirect exposure by buying shares in Grayscale funds and other third-party investment crypto products in the over-the-counter secondary market through some large retail trading platforms, such as Schwab.com and Fidelity.com.

The company's most popular fund -- the Grayscale Bitcoin Trust (GBTC) -- will likely become an ETF, if and when the SEC approves bitcoin ETFs in the United States. But in the meantime, it will adhere to the same SEC reporting and disclosure requirements that ETFs operate under today, said Grayscale CEO Michael Sonnenshein.

In either case, mind the fees, which are far higher than index fund fees.

Should the SEC eventually approve bitcoin ETFs, expect to see big players offering them, like Fidelity, which has already filed an application to launch one.

Talk with your spouse before taking the leap


If you're married, don't let crypto come between you.

"The most challenging client conversations I've had involving cryptocurrency investment are with spouses, usually with one or two children, and no tech background," said New Orleans-based certified financial planner Mike Turi.

Even when such couples are unified in having a high risk tolerance, one spouse may prefer to risk money on a more tangible speculative investment, such as a small-cap biotech company or a friend's startup, he explained.

His best advice? "Planning always prevails. Start with a client's plan and end with how cryptocurrency investing affects their current track. In my experience, this is the best way for spouses to make an informed, joint decision. A lot more powerful than beginning with the question - 'Is bitcoin a good investment?'"

Newsletter

Related Articles

0:00
0:00
Close
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
UK Struggles to Balance China as Both Strategic Threat and Valued Trading Partner
Argentina’s Markets Surge as Milei’s Party Secures Major Win
British Journalist Sami Hamdi Detained by U.S. Authorities After Visa Revocation Amid Israel-Gaza Commentary
King Charles Unveils UK’s First LGBT+ Armed Forces Memorial at National Memorial Arboretum
At ninety-two and re-elected: Paul Biya secures eighth term in Cameroon amid unrest
Racist Incidents Against UK Nurses Surge by 55%
UK Chancellor Rachel Reeves Cites Shared Concerns With Trump Administration as Foundation for Early US-UK Trade Deal
Essentra plc: A Closer Look at a UK ‘Penny Stock’ Opportunity Amid Market Weakness
U.S. and China Near Deal to Avert Rare-Earth Export Controls Ahead of Trump-Xi Summit
Justin time: Justin Herbert Shields Madison Beer with Impressive Reflex at Lakers Game
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
Giuffre’s Memoir Alleges Maxwell Claimed Sexual Act with Clooney
House Republicans Move to Strip NYC Mayoral Front-Runner Zohran Mamdani of U.S. Citizenship
Record-High Spoiled Ballots Signal Voter Discontent in Ireland’s 2025 Presidential Election
Philippines’ Taal Volcano Erupts Overnight with 2.4 km Ash Plume
Albania’s Virtual AI 'Minister' Diella Set to 'Birth' Eighty-Three Digital Assistants for MPs
Tesla Unveils Vision for Optimus V3 as ‘Biggest Product of All Time’, Including Surgical Capabilities
Francis Ford Coppola Auctions Luxury Watches After Self-Financed Film Flop
Convicted Sex Offender Mistakenly Freed by UK Prison Service Arrested in London
United States and China Begin Constructive Trade Negotiations Ahead of Trump–Xi Summit
U.S. Treasury Sanctions Colombia’s President Gustavo Petro over Drug-Trafficking Allegations
Miss USA Crowns Nebraska’s Audrey Eckert Amid Leadership Overhaul
‘I Am Not Done’: Kamala Harris Signals Possible 2028 White House Run
NBA Faces Integrity Crisis After Mass Arrests in Gambling Scandal
Swift Heist at the Louvre Sees Eight French Crown Jewels Stolen in Under Seven Minutes
U.S. Halts Trade Talks with Canada After Ontario Ad Using Reagan Voice Triggers Diplomatic Fallout
Microsoft AI CEO: ‘We’re making an AI that you can trust your kids to use’ — but can Microsoft rebuild its own trust before fixing the industry’s?
China and Russia Deploy Seductive Espionage Networks to Infiltrate U.S. Tech Sector
Apple’s ‘iPhone Air’ Collapses After One Month — Another Major Misstep for the Tech Giant
Graham Potter Begins New Chapter as Sweden Head Coach on Short-Term Deal
Ecuadorian President Daniel Noboa Alleges Poison Plot via Chocolate and Jam
Lakestar to Halt External Fundraising as Investor in Revolut and Spotify
U.S. Innovation Ranking Under Scrutiny as China Leads Output Outputs but Ranks 10th
Three Men Arrested in London on Suspicion of Spying for Russia
Porsche Reverses EV Strategy as New CEO Bets on Petrol and Hybrids
Singapore’s Prime Minister Warns of ‘Messy’ Transition to Post-American Global Order
Andreessen Horowitz Sets Sights on Ten-Billion-Dollar Fund for Tech Surge
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
‘Frightening’ First Night in Prison for Sarkozy: Inmates Riot and Shout ‘Little Nicolas’
White House Announces No Imminent Summit Between Trump and Putin
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Nicolas Sarkozy begins five-year prison term at La Santé in Paris
Japan stocks surge to record as Sanae Takaichi becomes Prime Minister
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
×