Retirement Planning and Crypto in 2025
It's no secret that when Donald Trump won the election in November 2024, Bitcoin was valued at $75,384.77. Just a month later, Bitcoin surged to $105,122.04. That’s an extraordinary rise, especially considering it was just $7,913 in 2020—only five years ago.
Should You Jump In to Crypto?
Before diving into crypto investing, let’s take a step back and review what Bitcoin is and how cryptocurrency investing works. Understanding these fundamentals is crucial to making informed investment decisions—especially when considering retirement and crypto as part of your financial future.
Bitcoin: The Basics
First and foremost, crypto is highly volatile. You can make significant gains, but you can also lose a lot of money.
Bitcoin and other cryptocurrencies are not tied to tangible assets. Unlike stocks or bonds, they do not generate interest or dividends. Instead, they rely solely on supply, demand, and market speculation.
Bitcoin was created in 2008 by an unknown entity known as Satoshi Nakamoto. No one has ever met Satoshi, and since 2011, there has been no verified communication from the creator(s). Bitcoin is the first decentralized global digital currency, existing only as a digital ledger entry—there is no physical Bitcoin.
Bitcoin appeals to those who want to exchange value without regulation. Unlike traditional currencies, it is not monitored or controlled by a central bank or government. This independence has made Bitcoin particularly attractive to those skeptical of government oversight.
How Bitcoin Transactions Work
Bitcoin transactions are recorded on a decentralized ledger called blockchain. Each transaction is verified by “miners” who solve complex cryptographic problems. The first miner to solve the problem earns a block reward—currently 6.25 Bitcoin. However, the system is designed to reduce this reward by half every 210,000 blocks, approximately every four years. The last halving occurred in April 2024.
Mining Bitcoin today requires immense computational power and electricity. Early adopters could mine Bitcoin using home computers, but now, industrial-scale operations dominate the landscape. This rising cost of mining is one reason Bitcoin’s price continues to climb.
Additionally, Bitcoin supply is limited. As of January 2025, there are approximately 19,819,291 Bitcoins in circulation, with a maximum cap of 21,000,000. This scarcity fuels investor interest, but skepticism remains regarding whether this limit will hold.
The Investment Perspective
Warren Buffett’s longtime partner, Charlie Munger, once said: “It is one thing to think gold has some marvelous value because man has no way of inventing more gold. But believe me, man is capable of creating more Bitcoin. They tell you there are rules and they can’t do it. Don’t believe them.”
So, what do you get if you invest in Bitcoin? Unlike traditional assets, Bitcoin does not pay interest or dividends. It is purely a speculative asset—you buy it hoping someone else will pay you more for it later.
If you buy $100,000 worth of Bitcoin and market demand surges, you might sell for $150,000 and make a significant profit. But the reverse can happen, too. From 2022 to 2023, Bitcoin plummeted from $46,000 to $16,000.
Key Considerations for 2025 Retirement Planning and Crypto
Positives:
- The U.S. now has its most crypto-friendly administration, likely leading to eased regulations.
- There is speculation that cryptocurrency could be included in U.S. reserves if the administration moves forward with favorable policies.
- Buying and trading Bitcoin has never been easier—Fidelity, Schwab, and other major firms now offer Bitcoin trading on their platforms.
- Investors can now purchase buffered crypto ETFs, offering some downside protection in exchange for limited upside potential.
If you’re considering retirement and crypto as part of your portfolio, it’s essential to assess your risk tolerance. Many financial professionals recommend limiting crypto exposure to 5% of your overall portfolio to maintain diversification and manage risk.
Final Thoughts
Crypto investing isn’t for everyone. It requires an appetite for risk and a solid understanding of market volatility. Before making any decisions, consult with professional advisors—and maybe even your doctor—to ensure both your financial and personal well-being can handle the swings of the crypto market.