Cryptocurrencies’ price charts look like a cardiogram after a triple espresso. Bitcoin is up more than 1,060% in the last five years, but it has experienced multiple drawdowns in excess of 80% in its lifetime so far.
It’s little wonder that 63% of U.S. adults say they have little to no confidence in crypto’s safety or reliability as an investment, per a survey by Pew Research. However, a 2025 Motley Fool research report found that 1 in 5 of the American adults it surveyed held cryptocurrencies, and 42% of those surveyed claimed they would buy crypto in the next year.
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Bitcoin Price data by YCharts
The good news is that you do not need steel nerves or uncanny luck to invest in cryptocurrency. Three straightforward habits can turn cryptocurrency investments from sleep thieves to profitable (if exciting) investments. Here’s what to do.
1. Work around volatility intelligently
Volatility in cryptocurrencies is the dragon most investors fear, yet there’s a relatively easy move that can turn it from a terror-inducing roller-coaster ride with your portfolio in the balance into a neutral fact of life that you can work around like it’s the weather.
Dollar-cost averaging (DCA) means buying a fixed dollar amount on a set schedule. When prices fall, you pick up more units; when they soar, you grab fewer. Using a DCA strategy can meaningfully reduce your maximum drawdowns compared with lump-sum buys. It also might reduce your returns a little bit under certain circumstances, but don’t fret about that at all.
It’s a lot better than accidentally buying a coin at the very top of its price range, only to see your investment immediately go deeply underwater for months or longer. It takes the pressure off because it automates your decision-making, taking emotion out of the loop and preventing anxiety in the process.
A weekly auto-purchase through a brokerage or an exchange-traded fund (ETF) converts the uncertainty into disciplined accumulation without mental gymnastics. Tie the buy to your payday and let the software do the heavy lifting.
Image source: Getty Images.
2. Stick to established winners
After you automate when and how much to invest, the next step is to tighten up the assets you’re investing in.
There are many terrible investments in cryptocurrency. They will lose all of the money you invest — in many cases, literally 100% of it. There is no need to go out on a limb and invest in small altcoins or meme coins in hopes of generating 10 times or 100 times your money. Those are traps that can literally destroy your portfolio’s value.
Ethereum, XRP, and Solana join Bitcoin in commanding roughly 75% of the entire crypto market cap, with Bitcoin alone hovering near 61%. Their liquidity is deeper, trading spreads are tighter, and there is real institutional research to scrutinize, which is far better terrain for long-term investors than thinly traded meme tokens.
These majors also map more cleanly onto concepts that stock pickers already understand, like network fees (akin to revenue), developer activity (research and development), and hash rate or validator count (production capacity). That makes them a lot easier to evaluate.
In contrast, smaller coins often live or die by social media hype and opaque tokenomics, leaving investors guessing about their intrinsic value — and often guessing extremely incorrectly.
Sticking to leaders dramatically reduces both rug-pull risk and the headache of moving obscure tokens between wallets. It will very likely power better returns with fewer frightening pullbacks, too.
3. Don’t go overboard with your allocation
Even crypto believers with patience and careful investing habits need guardrails. The easiest way to tame your crypto fears is to keep your dabbling limited to a small proportion of your portfolio’s overall value. That way, if you suffer unexpectedly high losses, it won’t be that meaningful in the long term.
You could perhaps start at 1%, all in Bitcoin, and grow it via dollar-cost averaging. After a year and at least one gut-check dip, reassess your nerves. If your stomach and thesis both hold, maybe nudge toward an allocation of 3% to 5%, spread across the big four.
If you’re still feeling confident a year later, you could cap your exposure near 10%; beyond that threshold, crypto’s volatility hijacks portfolio risk, turning a satellite position into the portfolio’s emotional center of gravity, which isn’t desirable.
As you accept crypto risk, you might also want to
Other things in your portfolio should stay boring the more risk you accept via a crypto allocation. That ballast turns crypto’s wild moves into asymmetric upside rather than an existential threat.
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Alex Carchidi has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
