Is crypto a good investment—or a financial roller coaster?

Not long ago, crypto felt experimental. For beginners, it was a daunting new asset class. Today, nearly half of American investors say they've owned crypto, according to Schwab's 2025 Modern Wealth Survey. And sentiment continues to evolve: 41% of Americans now consider crypto a good investment—many of whom admit they once felt skeptical.

So what changed? For many, it's the potential for outsized gains. Assets like Bitcoin have experienced significant bull runs, and investors who entered early—or timed their entry well—have seen massive returns. At the same time, the volatility has been unforgiving, and others who bought in at the wrong moment have faced steep losses, underscoring just how high the stakes can be.

But performance isn't the only draw. Some investors like the idea of betting on the future of finance, especially because many cryptocurrencies run on decentralized blockchain technology such as Ethereum. This technology provides secure and transparent transactions without relying on a central financial institution.

And for many younger investors, the appeal is accessibility. Compared with traditional wealth-building paths that can feel far off, crypto can feel more immediate—an entry point that's available now.

Still, caution runs deep. Half or so of both crypto investors (53%) and non-crypto investors (50%) still describe it as high risk per the Modern Wealth Survey.

That caution isn't unfounded. Bitcoin is roughly three times as volatile as the S&P 500. Smaller cryptocurrencies are even more volatile.

"The crypto market is broadly a momentum market that trades on sentiment," says Jim Ferraioli, director of digital currencies research and strategy at the Schwab Center for Financial Research. "Over a multi-year period, cryptocurrencies have a low correlation to stocks, but over shorter periods they can be strongly correlated."

Another difference is how investors evaluate them. "Cryptocurrencies have their own fundamentals, which can include metrics such as adoption and ownership, usage, transaction fees, etc., but most don't have traditional fundamentals you might see in a stock such as earnings," he adds.

Crypto isn't inherently good or bad—like always, there are risks of investing, and it's simply a high-volatility asset. The important question to ask isn't "is cryptocurrency safe to invest in?" but rather if it fits your financial situation, time horizon, and emotional tolerance for risk.

If you're crypto-curious, asking a few honest questions can help you find your comfort zone and determine if investing in cryptocurrency is the right move. Ask yourself:

Before investing in high-volatility assets, make sure the basics are covered. That typically means having three to six months of emergency savings and contributing enough to your employer-sponsored retirement plan to earn the full match.

If you're carrying debt, consider your entire personal balance sheet and develop a repayment strategy. "Crypto should just be part of your bigger financial plan and not the sole driver of something like paying off debt," Jim advises.

Limiting crypto to a small percentage of your portfolio can help manage risk. But if a 30% or 40% drop would derail your short-term goals or affect your ability to pay bills, it's probably not the right time to invest.

Decisions driven by momentum or social media buzz often overlook fundamentals and personal risk tolerance. If your primary motivation is fear of missing out, it may be time to tap the brakes.

Funds you'll need in the next year or two—for a wedding, a down payment, or another major expense—generally shouldn't be exposed to significant volatility. A downturn at the wrong moment could force you to sell at a loss.

Understanding your emotional response to market fluctuations is just as important as understanding the mechanics of how to invest in crypto. For some investors, price swings may be manageable. For others, they can be deeply stressful.

"If you're uncomfortable with volatility and are planning on adding cryptocurrency to your portfolio, you should consider that risk when determining how much to add," Jim says.

If you decide to invest, focus on reducing the financial risks you can control, like scams. Stick to established trading platforms. Be cautious of newly launched or unfamiliar cryptocurrencies. Avoid unsolicited investment advice, especially from people you don't know. If something sounds too good to be true, it probably is.

It's also important to understand the tax implications before you invest in crypto. The IRS treats cryptocurrency as property, similar to how real estate is handled, which means selling, trading, or even using it for purchases can trigger taxable events. You're responsible for tracking and reporting your gains and losses. It's also important to work with a qualified tax professional to help determine any potential tax implications or liabilities.

If you're interested in crypto but aren't certain when buying digital currency directly will make sense for you, there are other ways to gain exposure. Exchange-traded funds (ETFs), other exchange-traded products (ETPs), and certain mutual funds allow investors exposure to crypto through a brokerage account, without managing crypto wallets or private keys.

Starting with a more traditional investment vehicle may feel easier to manage, provided it aligns with your broader financial plan. Stocks of companies operating in the cryptocurrency and digital asset ecosystem can provide indirect exposure to crypto markets. Just keep in mind that these investments remain connected to a fast-moving market, and prices still fluctuate significantly.

"Crypto can be an additional asset to incorporate into your portfolio," Jim says. But it's not the only way to pursue your investing goals.

When it comes down to it, the fundamentals of long-term investing remain the same: a plan, consistency, and financial knowledge. Whether or not crypto is part of that plan is a personal decision—but it shouldn't be the only investment strategy on the table.

"While crypto investments are not appropriate for everyone, this is a fast-growing and relatively new asset class, so it's important to learn about," Jim says.