London Daily

Focus on the big picture.
Friday, Jan 16, 2026

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
The graduate 'jobpocalypse': Entry-level jobs are not shrinking. They are disappearing.
Cybercrime, Inc.: When Crime Becomes an Economy. How the World Accidentally Built a Twenty-Trillion-Dollar Criminal Economy
The Return of the Hands: Why the AI Age Is Rewriting the Meaning of “Real Work”
UK PM Kier Scammer Ridicules Tories With "Kamasutra"
Strategic Restraint, Credible Force, and the Discipline of Power
United Kingdom and Norway Endorse NATO’s ‘Arctic Sentry’ Mission Including Greenland
Woman Claiming to Be Freddie Mercury’s Secret Daughter Dies at Forty-Eight After Rare Cancer Battle
UK Launches First-Ever ‘Town of Culture’ Competition to Celebrate Local Stories and Boost Communities
Planned Sale of Shell and Exxon’s UK Gas Assets to Viaro Energy Collapses Amid Regulatory and Market Hurdles
UK Intensifies Arctic Security Engagement as Trump’s Greenland Rhetoric Fuels Allied Concern
Meghan Markle Could Return to the UK for the First Time in Nearly Four Years If Security Is Secured
Meghan Markle Likely to Return to UK Only if Harry Secures Official Security Cover
UAE Restricts Funding for Emiratis to Study in UK Amid Fears Over Muslim Brotherhood Influence
EU Seeks ‘Farage Clause’ in Brexit Reset Talks to Safeguard Long-Term Agreement Stability
Starmer’s Push to Rally Support for Action Against Elon Musk’s X Faces Setback as Canada Shuns Ban
UK Free School Meals Expansion Faces Political and Budgetary Delays
EU Seeks ‘Farage Clause’ in Brexit Reset Talks With Britain
Germany Hit by Major Airport Strikes Disrupting European Travel
Prince Harry Seeks King Charles’ Support to Open Invictus Games on UK Return
Washington Holds Back as Britain and France Signal Willingness to Deploy Troops in Postwar Ukraine
Elon Musk Accuses UK Government of Suppressing Free Speech as X Faces Potential Ban Over AI-Generated Content
Russia Deploys Hypersonic Missile in Strike on Ukraine
OpenAI and SoftBank Commit One Billion Dollars to Energy and Data Centre Supplier
UK Prime Minister Starmer Reaffirms Support for Danish Sovereignty Over Greenland Amid U.S. Pressure
UK Support Bolsters U.S. Seizure of Russian-Flagged Tanker Marinera in Atlantic Strike on Sanctions Evasion
The Claim That Maduro’s Capture and Trial Violate International Law Is Either Legally Illiterate—or Deliberately Deceptive
UK Data Watchdog Probes Elon Musk’s X Over AI-Generated Grok Images Amid Surge in Non-Consensual Outputs
Prince Harry to Return to UK for Court Hearing Without Plans to Meet King Charles III
UK Confirms Support for US Seizure of Russian-Flagged Oil Tanker in North Atlantic
Béla Tarr, Visionary Hungarian Filmmaker, Dies at Seventy After Long Illness
UK and France Pledge Military Hubs Across Ukraine in Post-Ceasefire Security Plan
Prince Harry Poised to Regain UK Security Cover, Clearing Way for Family Visits
UK Junk Food Advertising Ban Faces Major Loophole Allowing Brand-Only Promotions
Maduro’s Arrest Without The Hague Tests International Law—and Trump’s Willingness to Break It
German Intelligence Secretly Intercepted Obama’s Air Force One Communications
The U.S. State Department’s account in Persian: “President Trump is a man of action. If you didn’t know it until now, now you do—do not play games with President Trump.”
Fake Mainstream Media Double Standard: Elon Musk Versus Mamdani
HSBC Leads 2026 Mortgage Rate Cuts as UK Lending Costs Ease
US Joint Chiefs Chairman Outlines How Operation Absolute Resolve Was Carried Out in Venezuela
Starmer Welcomes End of Maduro Era While Stressing International Law and UK Non-Involvement
Korean Beauty Turns Viral Skincare Into a Global Export Engine
UK Confirms Non-Involvement in U.S. Military Action Against Venezuela
UK Terror Watchdog Calls for Australian-Style Social Media Ban to Protect Teenagers
Iranian Protests Intensify as Another Revolutionary Guard Member Is Killed and Khamenei Blames the West
Delta Force Identified as Unit Behind U.S. Operation That Captured Venezuela’s President
Europe’s Luxury Sanctions Punish Russian Consumers While a Sanctions-Circumvention Industry Thrives
Berkshire’s Buffett-to-Abel Transition Tests Whether a One-Man Trust Model Can Survive as a System
Fraud in European Central Bank: Lagarde’s Hidden Pay Premium Exposes a Transparency Crisis at the European Central Bank
Trump Announces U.S. Large-Scale Strike on Venezuela, Declares President Maduro and Wife Captured
Tesla Loses EV Crown to China’s BYD After Annual Deliveries Decline in 2025
×