Bitcoin’s recent meteoric rise has reignited discussions about its potential place in retirement portfolios, as the world’s largest cryptocurrency by market capitalization surged 142% this year. Since U.S. president-elect Donald Trump’s victory in November, Bitcoin has jumped 48%, surpassing $103,000. The rally has been fueled by hopes of a crypto-friendly administration, including Trump’s proposal for a national Bitcoin stockpile.
While some investors are eager to capitalize on the digital token’s extraordinary gains, financial advisors remain cautious, emphasizing the speculative nature of cryptocurrency. “I don’t think most retirees need Bitcoin,” said Christine Benz, Morningstar’s director of personal finance and retirement planning. “To the extent they hold it, put it in the ‘mad money’ portfolio.”
Bitcoin’s extreme volatility continues to raise concerns. Despite its longevity—nearly 17 years in existence—there is little data to model its performance across various market scenarios. “Most Bitcoin and crypto investments remain in the speculative category until proved different,” said Jamie Hopkins, chief wealth officer at WSFS Bank, who has cautiously recommended a small allocation for the past decade.
For some, Bitcoin has established itself as an asset class with staying power. “In reality, Bitcoin is an asset class that’s here to stay,” said Douglas Boneparth, president of Bone Fide Wealth. “How many more Thanksgiving dinners need to take place before skepticism wanes and we get mainstream adoption?”
However, skeptics highlight Bitcoin’s impracticality as a currency for everyday use due to its volatility. The cryptocurrency, initially designed to operate outside traditional financial systems, has gained more traction in developing markets with unstable currencies than in developed economies.
Trump’s administration has heightened expectations of Bitcoin’s integration into the financial mainstream. Over the summer, Trump advocated for a “strategic national Bitcoin stockpile,” and a Senate bill—the Bitcoin Act—proposes allowing the U.S. Treasury to buy and store the cryptocurrency. Despite this, Peter Eberle, president of Castle Funds, acknowledges that the bill remains a “long shot,” adding, “But the fact that it’s even in discussion is wild.”
For investors considering Bitcoin, exchange-traded funds (ETFs) like the iShares Bitcoin Trust ETF offer an accessible entry point. Alternatively, individuals can purchase Bitcoin directly through brokerages such as Coinbase or Fidelity. Advisors recommend limiting exposure to 1% of a portfolio to mitigate risk.
“Think of Bitcoin like a lottery ticket,” said Eberle. “While some analysts see it eventually reaching $1 million, it could also tank 75% in months. If this is money you’re going to live on, it’s probably too risky.”
