The Trump administration made it easier to invest retirement funds in cryptocurrencies when it scrapped Biden-era guidance in May 2025 that warned plan managers to exercise “extreme care” before adding digital currencies to 401(k) options. The Department of Labor tossed that guidance aside because it wasn’t “neutral,” clearing the way for more plans to offer Bitcoin and other cryptocurrencies alongside traditional investments.
Congress doubled down in July by passing three bills that expand crypto access for Americans during what it called Crypto Week. These policy shifts make it simpler than ever to funnel your retirement dollars into digital assets.
Your retirement fund serves one critical purpose: providing a reliable income when you stop working. So do cryptocurrencies help you reach that goal? Here are three reasons they might not.
1. Crypto’s wild price swings can destroy decades of savings
Saving for retirement works best when your investments grow steadily over time. You want to know that the money you’re putting away today will still be there — and hopefully grow larger — when you need it in 20 or 30 years.
While most investments can’t guarantee future results, cryptocurrency prices tend to move like a financial roller coaster, with frequent and massive price drops that can happen without warning.
Historically, the crypto markets had several boom-and-bust cycles that saw euphoric price increases followed by devastating and extended downturns where prices fell 70% to 80% and stayed depressed for years.
Between 2017 and 2018, Bitcoin plummeted from nearly $20,000 to around $3,200. The 2021 and 2022 crypto bear market saw Bitcoin crash 77% from $69,000 to under $16,000. While Bitcoin’s price has trended higher over time, investors who bought near those peaks lost most of their money and waited years just to break even.
From 2021 to 2023, the Government Accountability Office (GAO) found that the five crypto assets available to 401(k) plans were four to 12 times as volatile as the S&P 500, which tracks the 500 largest U.S. companies. Research also shows that Bitcoin’s volatility has been nearly 10 times higher than major fiat currencies, such as the US dollar.
This means that while the S&P 500 might go up or down 0.50% to 1% on a typical day, cryptocurrencies can easily swing 5% to 10% or more. That’s why there’s no shortage of stories involving massive financial losses from crypto investments.
How does this reflect on your retirement portfolio?
If you’re in your 50s or approaching retirement, you simply can’t afford to watch half your savings disappear overnight. If you happen to retire during a major crypto downturn, it could fundamentally alter your retirement lifestyle.
Even President Trump’s own cryptocurrency reflects these risks. The $TRUMP coin launched in January 2025 and skyrocketed to $75 before crashing back down. Someone who bought $10,000 near the peak would have lost more than $8,500 as of today. Of roughly 764,000 people who bought Trump’s coin, most lost money while Trump’s companies collected over $320 million in fees.
The GAO found that adding 20% Bitcoin to a retirement portfolio could lead to losses five times worse than a traditional mix of stocks and bonds, with twice the wild price swings and 28% lower returns when accounting for the extra risk.
Learn more: How to recession-proof your retirement with these 7 smart strategies
2. Crypto doesn’t actually produce anything valuable
When you buy stock in a company, you’re purchasing a small piece of a business that generates profits from products or services it offers. Those companies pay dividends — regular cash payments to shareholders—and their stock prices typically reflect how well the business performs over time.
Take Microsoft, for example. The company generates billions in revenue from software sales, cloud services, and other products. Part of those profits gets returned to shareholders as dividends, and the stock price generally rises when the company grows its business and earns more money.
Bonds work similarly. When you buy a bond, you’re essentially lending money to a company or government to help fund their operations. In exchange, they pay you regular interest payments and promise to return your original investment when the bond expires. It’s a predictable income based on a formal agreement.
Cryptocurrency offers neither of these benefits. Bitcoin doesn’t run a business, sell products or generate real-world value beyond its price movements. It doesn’t pay dividends or interest. As the GAO report explained, “A primary risk of crypto assets we reviewed is that they mainly derive their value from investor sentiment rather than through tangible company assets or cash flows.”
What this means for your retirement
Crypto’s value depends entirely on what other people think it’s worth at any given moment. If sentiment shifts — maybe due to regulatory concerns, market fears or just changing trends — the price can plummet regardless of any underlying value. That’s not the kind of foundation you want supporting your retirement security.
Learn more: What are mutual funds? Your guide to professional portfolio management
3. Crypto fraud and theft are still rampant
The cryptocurrency world remains infested with scams, hacks and brokerage failures that can permanently destroy people’s savings. Unlike traditional bank accounts or investment accounts that offer fraud protection and failure insurance, crypto losses are typically permanent and unrecoverable.
According to the FBI’s Internet Crime Complaint Center, Americans lost a record $9.3 billion to crypto-related scams in 2024, based on more than 140,000 complaints. This is a 66% increase from previous years, with most scams targeting people who are 60 and older.
The most dangerous crypto threats
Investment scams. Fraudsters promise huge returns on fake crypto investments, then disappear with people’s money. The FBI found that investment fraud involving cryptocurrency accounted for over $6.5 billion in losses in 2024.
“Pig butchering” schemes. Scammers build fake romantic or friendship relationships over weeks or even months, then gradually convince victims to invest in bogus crypto platforms.
Exchange hacks. Even legitimate crypto exchanges get breached regularly. Criminals continue to find ways to steal funds from platforms that people thought were secure.
Exchange failures. Even major, seemingly reputable crypto platforms have suddenly collapsed, taking billions in customer funds with them. FTX was once the world’s second-largest crypto exchange before it went bankrupt in 2022, wiping out $8 billion in customer deposits.
Private key theft. If someone gets access to your crypto wallet’s private key, they can transfer all your money to themselves instantly and irreversibly.
The FBI reported that people over 60 suffered $2.8 billion in losses in 2024 — more than any other age group. Once crypto is stolen, it’s typically gone forever. There’s no FDIC insurance, no fraud department to call and no way to reverse the transaction.
Learn more: Top 15 financial scams targeting older Americans — and what you can do to avoid them
What should you invest in instead of crypto?
Retirement planning typically relies on diversified portfolios of stocks, bonds and other traditional assets that have proven themselves over decades. These investments offer regulatory protection, have a lengthy history of long-term growth and come with the boring reliability that actually gets people to comfortable retirements.
Your 401(k) likely offers target-date funds that automatically adjust your investment mix as you age, shifting from growth-focused stocks when you’re young to more stable bonds as you approach retirement.
For a more customized approach, you can invest in index funds that give you ownership in hundreds or thousands of companies for incredibly low fees. Working with a financial advisor can help you create a strategy tailored to your specific retirement timeline and risk tolerance.
While these investments might not offer the thrill of potentially striking it rich overnight, they provide a more realistic expectation that your money will still be there when you retire, hopefully having grown substantially over the years.
Learn more: How to find a trusted retirement advisor
More stories in our retirement planning series
How much should you have in your 401(k) based on your age?
Can you really retire with $500,000 in savings and investments?
What is the 4% rule for retirement?
How to plan your retirement withdrawal strategy
Should you ever use a 401(k) loan to pay off debt?
📩 Have thoughts or comments about this story — or ideas on topics you’d like us to cover? Reach out to our team.
