Cryptocurrencies were one of the most talked about assets in 2024, so much so that NBC News listed Bitcoin as the top-performing asset for the year. Rising by about 125%, this leading asset performed over 5 times better than the S&P 500, which grew by 23%. Although the digital asset market has always been popular, this fame soared incredibly after this feat, making many wonder if that investment could make them a fortune. It has also got some people thinking about whether it could be a good investment idea for retirement. This might sound like a plan, but only without considering how risky the crypto sector is.
Is Crypto a Worthy Long-term Investment?
People explore financial investment for different reasons. Likewise, all assets have a period they are best suited for. Options like money market accounts and mutual funds are typical examples of short-term investments because they come with zero risk and can yield returns in as little as one to three months. On the other hand, the cryptocurrency market can be a long-term or short-term alternative, depending on the trader’s intentions. The major challenge here is what it promises for the future; when investors choose long-term asset classes, they consider reliability and trust in the system. These elements are things that are still yet to be certain for crypto investments.
Since Bitcoin’s first launch in 2009, its prices have increased considerably beyond investors’ expectations. The first-ever record price of the coin was $0.03 in 2010, and it reached an all-time high of over $108,000 in December 2024. However, the asset has also witnessed some of the biggest market crashes. In June 2011, BTC did numbers when it rose from $2 to more than $32, but this same year, it plunged in value and fell 99.9%, down to one penny. Similarly, in April 2021, the coin recorded a new high of $64,314, only to plunge 53% down by May 22nd. This shows that despite this asset’s incredible potential, it is also prone to the most unstable market movements in the financial market. Bear in mind that BTC is the first crypto coin, and its movements dictate how other digital assets perform on the markets.
Investing in crypto might be a good idea for short-term gains, but banking on it for long-term success could backfire. There are possibilities of success, but market volatility is sometimes so high that one might be forced to withdraw their earnings before making that big win. This is why pensioners are mostly advised to look for safer alternatives like the SSAS pensions scheme (Small Self Administered Scheme), SCSS (Senior Citizen Saving Scheme), mutual funds, and fixed bank debts.
Why Is Crypto So Volatile?
You might wonder why crypto market investments are unstable. Some reasons for this include the lack of regulation, security concerns, and the predominantly sentiment-driven market.
Many alternative assets in the financial market are regulated. The Securities and Exchange Commission (SEC) has some entities under its authority, like the New York Stock Exchange, NASDAQ, and other alternative trading systems. The essence of these regulations is to ensure the protection of investors and their funds while also maintaining efficient and transparent systems of operation. A regulatory body is one of the things the crypto market lacks; as a result, there is disorder and volatility in the extreme, especially when it comes to new coins on the market. While traditional exchanges can take measures to suspend market activity during times of extreme volatility, the crypto market has no such system in place, and things are very much running on free rein.
Blockchain assets run on a decentralized model, and such a ledger potentially poses severe security concerns. Anonymity is something hackers can easily take advantage of by using untraceable wallets to initiate cyber attacks, which is a major drawback. The crypto market also runs majorly on sentiment, which is the collective attitude of investors, particularly major market movers like financial institutions. This means that such a market can easily waver based on the feelings of a select group of people (especially in their favor). Elon Musk’s influence on some meme coins in the past is a lasting reference. His stance and public comments have pushed dramatic fluctuations more than once — most memorably for Dogecoin. If one person can have that much effect on an ecosystem, the model is clearly in need of structural changes.
Alternative Investments for Retirees
Investing for retirement should be a more carefully calculated plan because so much of one’s last days depend on it. If you plan to get in and out quickly, crypto could be an option. However, in the long term, it is advisable to look for safer, less volatile, and risky options. SSAS, for instance, is a pension scheme set up by companies for their employees on a contribution basis. Members can choose how much they want to save and how it should be invested, and they can explore flexibility. There are also additional benefits, like:
- Growth in the value of investment within the scheme is tax-free.
- When benefits are withdrawn, a portion (about 25%) can be received as a tax-free lump sum, while the rest is taxed as income.
There are many other alternatives to consider for retirement, such as commodities, private equity, hedge funds, and savings accounts. Employees can also seek better direction from private financial advisors, so their interests are the top priority.
Thinking Long-Term
When a significant and vulnerable portion of one’s lifetime depends on retirement savings, a lot is at stake, and the reward should be certain in the long term. When making a choice, the goal should be prioritizing stability and patience rather than high rewards. While crypto assets easily offer the latter, working people should lean more toward alternatives that guarantee the former.
