Crypto Investing

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• How Much of Your Portfolio Should be in Crypto?

  Our golden rule to investing in crypto.

• How to Get Started Investing in Crypto

  Investing in crypto is complicated but it doesn’t have to be. Here’s how to get started.

• What is a Crypto Portfolio?

  To ease the burden of investing in crypto, we’ve created managed crypto portfolios, built by ...

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All Crypto Investing articles

• A simple way to invest in Bitcoin and Ethereum

• Top 5 Benefits of Managed Crypto Investing

• A Sustainable Approach to Crypto Investing

• Making Sense of Crypto Volatility

• Beyond Bitcoin: The Importance of Diversification in Crypto

Our goal is to be here for you, to be your guide on your crypto investing journey. That’s why we created managed crypto portfolios, expertly-curated selections of crypto investments—so you don’t have to navigate the world of crypto alone.

Check out the five benefits that we built our managed crypto portfolios around:

1. Diversification

With our portfolios, you directly own multiple cryptocurrencies in a diversified way that reflects the crypto landscape. Investing in a diverse set of cryptocurrencies helps lower exposure to any single crypto asset, which may decrease the impact of volatility on your portfolio.

2. Automation

You can turn on recurring deposits to invest effortlessly. Plus, automatic rebalancing helps manage risk in your portfolio. The automated rebalancing process is designed to periodically sell some of the highest-performing assets and buy some of the lowest-performing assets to return the basket to its overall desired weighting, reducing overexposure to any single crypto asset.

3. Expert-built

Our experts track the industry closely to build and manage crypto portfolios designed to capture the long-term growth of crypto markets overall while mitigating risk through diversification. Our investment team curates portfolios using a set of consistent criteria for each crypto asset including an established historical trading history, an adequate market capitalization, and the ability to trade each individual crypto asset easily.

4. In-depth resources

We’re here to help you better understand crypto, with short articles, videos, and our easy-to-read newsletter BetterBlocks. Check out our Crypto Resource Center.

5. Advanced security protocols

You can invest comfortably knowing that we use advanced security protocols. We partnered with Gemini Trust Company, LLC as our custodian for crypto assets, and Gemini is a New York registered trust company regulated by the New York State Department of Financial Services (NYDFS) and New York Banking Law.

See how our experts have built a Sustainable crypto portfolio.

Crypto requires large amounts of computing power for its underlying blockchain technologies to operate. Some critics of cryptocurrency have even suggested that the required computing power could lead to an energy crisis. For example, each year Bitcoin uses more electricity than the entire country of Argentina, a population of around 45 million. Crypto’s sustainability has been a concern of governments and industry critics alike.

Leading with Cautious Optimism

The sustainability concerns around crypto are worth taking seriously. At Betterment, we see a couple of reasons for cautious optimism.

Not all blockchains are the same when it comes to energy consumption. Generally, Proof of Stake blockchains are more sustainable than Proof of Work blockchains. (Proof of Work and Proof of Stake are two of the main methods to validate cryptocurrency transactions.)

Some blockchains are working to improve their energy efficiency. One way to do this is by migrating from Proof of Work to Proof of Stake.

Building a Sustainable Crypto Portfolio

For our Sustainable Crypto portfolio, we look to balance diversification and sustainability, by looking to both cryptocurrencies that transact sustainably, and to those on networks with a path to sustainability.

We start with all the crypto assets which meet our overall selection criteria, then factor in the following considerations:

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• We keep assets that currently transact on lower energy intensive blockchains, such as Proof of Stake.
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• We also consider keeping any assets that transact on a Proof of Work blockchain, if there is a credible roadmap to migrate to Proof of Stake.
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• We exclude assets that transact on Proof of Work blockchains, without a credible roadmap to migrate to Proof of Stake.
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Ethereum: A Path to Sustainability

At Betterment, we’re taking a forward-looking approach as we assess the sustainability path of any given cryptocurrency. Ethereum is a great example of a leading cryptocurrency that is moving along a path to sustainability.

In September of 2022, Ethereum migrated from Proof of Work towards Proof of Stake in an event dubbed “the Merge.” It is estimated that Ethereum’s total energy use may decrease by 99.95% as a result. Ethereum is a perfect example of a crypto project that is executing on a plan to advance along the sustainability spectrum, thus making its way into our Sustainable Crypto portfolio.

We believe that the Merge can be seen as analogous to a net-zero commitment made by a massive global enterprise. We expect more projects to follow in Ethereum’s footsteps, and begin to address the sustainability concerns around their operations. Moreover, as the industry evolves, we expect more projects to make sustainability their core focus.

Crypto is a volatile asset class. But there are things you can do to prepare for likely losses that accompany potential gains.

We’ll jump straight to the point: Crypto is definitely a volatile asset class, meaning it can have large positive and negative returns. But there are things you can do to prepare for likely losses that accompany potential gains.

Your secret power: Being ready for volatility

There is no sugar-coating volatility in crypto, but understanding it can help set you up for long-term success. As an investor, having a plan for how you will respond to volatility ahead of time (and sticking to it) can be your secret power. When the market falls and everyone else is panic selling, you’ll know what to do.

Let’s cover the basics of volatility in crypto:

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• Volatility refers to how much crypto prices change over time.
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• Generally, the larger the price changes, the more risky an investment tends to be, and the greater chances of both gains and losses.
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• Crypto has been very volatile in its short life, with prices climbing and falling regularly. For example, since 2021, the price of Bitcoin has bounced around with peaks near $70,000 and lows under $20,000—this is volatility in action.
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3 steps to help coast through crypto volatility

You don’t have to let volatility take you for a ride. Here are three tools that you can use to manage through volatility to help keep your investments on track over the long term:

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• Diversify your investments. If your overall investment portfolio is diversified, crypto doesn’t have to feel as daunting if it’s only a small percent of your net worth. That’s also why we recommend only 5% or less of your investable assets in crypto.
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• Use dollar cost averaging. One method is to use dollar cost averaging to reduce risk and build up your investment over time. Using dollar cost averaging, you would deposit a consistent amount into your crypto portfolio each month. At Betterment, you can set up a scheduled deposit into your crypto portfolio to automate dollar cost averaging. This results in buying more units when prices are low and less when they’re high. You can use this approach with stocks and bonds as well.
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• Be intentional about monitoring your portfolio. It can feel good to log in and see gains, sure. But logging in during a down period will probably just make you feel stressed. And we don’t make good decisions when we’re stressed—like panic selling for a loss. Take a break from frequently checking your performance when markets are down.
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You should invest in more than one cryptocurrency just like you’d invest in multiple stocks and bonds.

Sometimes we hear the question: Is diversification important in crypto in the same way it is with traditional investing in stocks and bonds?

The short answer is: Yes, diversification is important—you should invest in more than one cryptocurrency just like you’d invest in multiple stocks and bonds.

But let’s expand on this thought.

Diversification beyond Bitcoin and Ethereum

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The general goal of diversification is to try and reduce the risk of losses while increasing your expected return. We can do this by making investments in a broad set of assets, limiting exposure to any one holding.

With crypto, we recommend investing in multiple tokens, expanding beyond Bitcoin and Ethereum, to help limit exposure to any single asset. Diversification can give you wider exposure to the growing crypto landscape.

How to diversify in crypto

If you haven’t invested in crypto yet, or have only invested a little in Bitcoin or a small handful of other tokens, we recommend starting small and slow. Here are two tips to get started:

Choose your overall crypto allocation

Think of crypto as a small part of your larger investment strategy—not a one-off investment. Diversification matters within your crypto investment but also across all of your investments. You need to answer the question: how much of my investable assets do I want in crypto? It seems like a big question, but we try to make it easier on you. Our experts recommend no more than a 5% allocation of your total investable assets.

Invest in multiple cryptocurrencies

This one is important. We’re so early in the life span of crypto that picking a few winners from thousands of coins is unlikely—that’s why we offer diversified, expert-curated portfolios with multiple coins that can change over time as the crypto markets evolve.