Is crypto a good investment? Why risk tolerance and dollar-cost averaging matter

The interest in crypto was up 300% compared to the preceding five years. At least, according to the popularity of the search term “crypto” on Google Trends. In the long-run, the baseline popularity of crypto has grown fourfold, even as the price of Bitcoin [BTC] struggles to break out of a downturn that began last October.

This popularity can be explained by the rise of institutional investment, spot exchange-traded funds [ETFs], and developments such as real-world assets being onboarded onchain through tokenization. AD Increasingly, crypto is seen as an attractive investment option. The Charles Schwab 2025 Modern Wealth Survey found that two-thirds of the surveyed American investors believe that they must look beyond traditional investment products for better investing success.

Breaking down portfolio allocation into crypto On average, stocks comprise 25% of investors’ portfolios, followed by mutual funds at 13%, bonds at 8%, and cryptocurrencies at 10%. Half the Americans surveyed agreed that investing today requires more short-term risk than it did in the past. The high volatility crypto has seen since its inception meant that 53% of all crypto investors considered it a high-risk venture.

With high risk, there can be big rewards. Source: TradingView Since July 2017, the total crypto market cap has grown by around 2,600%, from $77 billion to $2.19 trillion.

As a nascent asset class, its quick growth is expected to slow down over time, but still continue upward. What you must ask yourself before considering crypto as an investment The rewarding nature of crypto investment can easily mask the thousands upon thousands of traders and investors burnt by exchange hacks, rug pulls, scams, stolen wallet passwords, and just plain bad investment timing. Whether crypto is good for an investor comes down to their goals, investment targets, risk appetite, and time horizon.

Investors should remember to only invest in crypto what they can afford to lose. This means that limiting the size of crypto in their portfolio to acceptable levels, per their tolerance. For example, BlackRock recommends a 1-2% allocation to Bitcoin.

Time horizon is something to consider. Those with a multi-year outlook would be less likely to react to market hype and panic cycles, while shorter-term investors might want to see steadier returns. Depending on where crypto is in its cycle, such expectations could be pleasantly satisfied or face disastrous results.

Having some idea of dollar-cost averaging into bear markets and being comfortable with price swings, while occasionally keeping up with crypto market trends, could be a good way for investors to get some exposure to this alternative investment class. Whether the investor chooses established exchanges and buys top-cap crypto assets, or chooses to go towards ETFs, consistency, risk management, and financial knowledge would remain key, just like with any other investment options. Final Summary Crypto can be a solid investment option, but there are many questions an investor must ask themselves before entering.

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