Cryptocurrency: Risks, Responsibilities, and Readiness

Over the past five years, cryptocurrency has experienced a meteoric rise from relative obscurity to a central topic in financial conversations. Many believe it will disrupt central banking systems and represent the future of currency. But for everyday investors, the more important question is: Where does crypto actually fit in my financial life, if at all? 

Cryptocurrency can feel abstract. It’s not something you can physically hold, and it isn’t backed by a government or a traditional company. Like all currency, its value is based on trust and adoption. The U.S. dollar holds value because it is backed by the U.S. government and widely accepted.

Cryptocurrency operates differently; its value is driven by demand, speculation, and market sentiment, which can introduce a higher level of uncertainty.  

For instance, Bitcoin has experienced significant price swings—rising to nearly $125,000 in 2025 and dropping below $70,000 shortly after. These fluctuations can create opportunity, but they also introduce risk, especially for investors who may not be prepared for that level of volatility. 

Risks, Regulation, and Responsibility 

One of the biggest considerations with cryptocurrency is the evolving regulatory environment. Unlike traditional financial markets, crypto operates with less oversight, which can expose investors to fraud, mismanagement, and scams. High-profile cases involving major exchange leaders such as FTX’s CEO Sam Bankman-Fried, Binance CEO Changpeng Zhao, and former Celsius CEO Alex Mashinsky, have highlighted the potential risks within the space. 

This doesn’t mean crypto has no place in investing, but it does mean that due diligence is critical. Investors should understand where their money is going, how platforms operate, and what protections, if any, are in place. 

Establishing a Foundation 

If you have been considering crypto for some time, you must ask yourself: Do I have a good financial foundation? The answer is probably no. Most Americans cannot cover a $1,000 emergency and are not contributing 5% of their income to their 401(k). Yet many are willing to take significant risks with cryptocurrency. The attraction is there, but the stability is not. When I advise clients, I recommend building a financial foundation: at minimum, three months of emergency savings covering essentials like groceries, gas, and housing; opening a brokerage account; investing 5% (or more depending on their situation) into their retirement accounts (401(k) or Roth IRA) and increasing contributions when possible. By establishing a strong financial foundation, you can afford to take on a bit of risk. 

Am I Ready for Crypto? 

Cryptocurrency remains a highly volatile asset and it’s important to determine the level of risk you are willing to take. From the example above, Bitcoin rose above $125,000 only to fall below $70,000 within less than a year—is that something you can handle? Is this an asset you want held inside your 401(k) or pension? If crypto is a major asset in your portfolio, you could be putting your financial safety at extreme risk. Therefore, it is not recommended to include it in your retirement plans; it should be kept separate from your more long-term and stable financial goals.  

While it is generally advised that younger investors invest in more stocks than bonds because they can handle drops in the market because retirement is further away (i.e. 20 years or more), it is certainly not advised for older investors coming close to retirement within the next 10 to 15 years. Those nearing retirement are generally advised to take on more conservative investments and avoid riskier assets.  

Adding cryptocurrency to the investment planning equation adds another layer of complexity because there is no general guidance on how much to invest in crypto. Cryptocurrency is neither a stock nor bond, is largely unregulated, and can lose all value without notice. The United States Congress is working to figure out how it works, its role, and how to regulate it. Cryptocurrency is still maturing as a financial asset, and with that comes opportunity and uncertainty. Rather than approaching it with fear or hype, investors should approach it with curiosity, caution, and clarity. 

There are thousands of cryptocurrencies in the market, and even exchange-traded funds are now tracking crypto and no one knows which one will be the next Bitcoin or Ethereum. If you’re considering adding crypto to your portfolio, working with an Accredited Financial Counselor® can help you evaluate whether it aligns with your overall financial plan. The goal isn’t to avoid new opportunities—it’s to engage with them in a way that protects your financial well-being. 

Samuel Molina is an Accredited Financial Counselor®, Certified Financial Therapist™ Practitioner, CEO and Founder of The Academy of Financial Education, a non-profit organization dedicated to helping the community have a healthier relationship with money. Visit Samuel’s FindAnAFC profile to view his services and connect with him on LinkedIn.