Arab Press

بالشعب و للشعب
Saturday, May 30, 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

Arab Press
0:00
0:00
Close
Japanese Technology Firm Fujitsu Launches Advanced Artificial Intelligence Tool for Corporate Disclosures
South Africa Officially Launches Nationwide Campaign for Highly Contested Local Government Elections
United Kingdom Commits Additional Funding for Unexploded Ordnance Clearance in Laos
Singapore Announces Stringent New Greenhouse Gas Regulations for Commercial Cooling Systems
Cambodia and Thailand Hold High-Level Border Security Talks at United Nations Headquarters
Myanmar Military Government and China Sign Major Agreement to Upgrade Media and Cultural Cooperation
Knife Attack at Swiss Train Station Leaves Three Injured in Suspected Act of Domestic Terrorism
Transnational Extortion Gang Threatens Canadian Police With Army of One Thousand Armed Operatives
Australia Imposes Forty-Two-Day Quarantine on Cruise Ship Passengers Following Deadly Hantavirus Outbreak
International Monetary Fund Unlocks Seven Hundred Million United States Dollars for Sri Lanka Following Economic Reforms
Australia Launches Record One Point Four Billion Dollar Lawsuit Against Chemical Giant 3M Over Contamination
China and Canada Foreign Ministers Meet in Ottawa in Effort to Stabilize Strained Diplomatic Ties
Indonesia Demands Urgent United Nations Security Council Reform Amid Escalating Global Conflicts
Extreme Weather Patterns Trigger Severe Drought in Madagascar and Destructive Flooding in East Africa
Indian State of Karnataka Faces Political Upheaval as Chief Minister Siddaramaiah Abruptly Resigns
Philippines and Japan Reaffirm Defense Ties as Crucial for Indo-Pacific Regional Stability
Norway Joins French Nuclear Deterrence Initiative in Major Shift for European Security Architecture
Global Critical Mineral Alliances Expand as Western Nations Move to Counter Chinese Supply Dominance
United States Imposes Fifty Percent Tariffs on Mexican Steel and Aluminum Ahead of Trade Pact Review
European Union and China Head Toward Major Trade Conflict Over Clean Technology Exports
United States Economic Growth Severely Downgraded to One Point Six Percent as Stagflation Fears Mount
World Health Organization Warns Central African Ebola Epidemic is Outpacing Containment Efforts
United States Treasury Department Conditions Sanctions Relief on Reopening of the Strait of Hormuz
Iranian Air Defenses Intercept and Destroy United States Military Drone Over Bushehr Province
Iranian Armed Forces Launch Ballistic Missiles Toward Unspecified Targets Prompting Regional Condemnation
United Nations Secretary-General Warns Global Order Facing Highest Level of Conflict Since 1945
Israel Issues Sweeping Evacuation Orders in Southern Lebanon Amid Intensified Hezbollah Conflict
Russia Announces Systemic Military Strikes Targeting Ukrainian Defense and Energy Infrastructure
United States and Iranian Negotiators Reach Draft Agreement to Extend Ceasefire and Resume Nuclear Talks
United Nations Security Council Deeply Divided Over United States Capture of Venezuelan President
US and Iran Exchange Direct Military Strikes Amid Fragile Gulf Ceasefire
World Health Organization Warns of Catastrophic Ebola Outbreak in DR Congo
Russia Threatens New Wave of Strikes on Ukrainian Infrastructure and Embassies
Scientists Warn Atlantic Ocean Currents Could Collapse Faster Than Projected
Anthropic Reaches $900 Billion Valuation in Historic AI Funding Round
Washington Imposes Crippling Sanctions on Iranian Maritime Authority
Japan and the Philippines Initiate Strategic Intelligence-Sharing Pact
Microsoft Deploys Autonomous Computer-Using AI Agents to Global Markets
Anthropic Secures $45 Billion Compute Infrastructure Agreement With SpaceX
U.S. Director of National Intelligence Resigns Amid Administration Shakeup
Micron Technology Crosses Trillion-Dollar Valuation Amid Unprecedented Hardware Demand
Canada and Germany Finalize Historic Long-Term LNG Export Agreement
China Expands International Travel Restrictions on Domestic AI Researchers
Japan Approves Sweeping Overhaul of National Intelligence Apparatus
Global Airlines Scramble Logistics as Middle East Airspace Remains Fractured
Japan's Naphtha Imports Plunge 47 Percent Amid Strait of Hormuz Closure
Global Crude Prices Retreat Below $96 as Gulf Tensions Momentarily Ease
Generative AI Outperforms Human Baselines in Landmark Global Creativity Study
NASA Partners With Private Aerospace to Unveil Permanent Lunar Base Architecture
South Korean Equity Markets Surge on Next-Generation Memory Chip Frenzy
×