Despite weakness in the markets, Bitcoin has started the year strong and continues to rally. However, there is skepticism among advisers about whether investors should add cryptocurrencies to their portfolios, despite last year’s rally making crypto one of the fastest-growing categories of exchange-traded funds. The approval of Bitcoin by the Securities and Exchange Commission in 2024 was a key change for the industry, providing new options for crypto investors in various types of accounts, including individual retirement accounts and brokerage windows for plan sponsors offering a self-directed option for 401(k)s and employer-sponsored retirement plans.
Views are mixed on how much crypto should be added to retirement savings, with some financial advisers recommending it as a noncorrelated alternative asset class and hedge against fiat devaluation, while others caution against volatility and risk. Since crypto can increase risk over time, some suggest being conservative to protect one’s nest egg in the long run.