In summary, no.
If you are interested in why, please keep reading!
I’m always interested in new things in the world of investment and retirement planning, and Bitcoin and cryptocurrencies have been one of the innovations which has affected the investment world. In my view, however, other technologies are having a much bigger influence, making it easier to invest in some assets (e.g. physical gold) and making it easier to move from one investment to another.
There has been more interest in Bitcoin and cryptocurrencies than many other innovations and we have been keeping a close eye on developments. Recently, the FCA and overseas regulators have become more accepting of cryptocurrency investments. In the UK, it will soon be possible to hold cryptocurrency funds in ISAs, and well known institutions, like Invesco, have launched funds, and platforms like AJ Bell and Fundment will make the funds available to their clients.
The logic behind Bitcoin was that there was a finite supply of the coins, and that it is secure and free from government interference. There have been many other arguments presented in its favour, but none stand up to any real scrutiny.
The strongest argument in favour of Bitcoin is its finite supply, compared to traditional currencies, which central banks of governments have a tendency to print more of – and this has been particularly true since the Global Financial Crisis of 2007/08. However, the argument no longer holds water as Bitcoin is not the only cryptocurrency, and there are now around 20,000 different cryptocurrencies available. The amount of cryptocurrency “printed” exceeds the amount of traditional currency printed.
The argument about security is a poor one. 8% of Bitcoins have been lost and are unlikely to be recoverable – because nobody knows where they are! Those people who have lost their Bitcoins won’t feel that their investment is secure. There are other concerns about security too – it seems likely that quantum computing will break the encryption of the currency – possibly within five years, and this will mean that Bitcoin is not secure at all. The technical workings of Bitcoin are hugely complicated, and there are very few people who can understand it, so ownership is really a matter of trust. If we cannot be sure that we do actually own the coins, we can’t say that they have a value. However, the entry of trusted institutions, like Invesco, into the market may allay some of the concerns about security.
It is true that Bitcoin is less open to government interference, but it isn’t completely immune. Some governments (including the UK, USA and China) now have cryptocurrency reserves through their central banks, giving them influence over the supply, and, therefore, the price, of Bitcoin. El Salvador has even recognised Bitcoin as legal tender, but it is the only country in the world to do so.
There is, however, one reason why some people might consider Bitcoin, and, possibly, other cryptocurrencies.
The main reason to own Bitcoin is to speculate using the volatility of its price. Speculation is a bit of fun – it’s not an investment strategy. But if speculating is your idea of fun, then it could be enjoyable.
If you had been able to time the market, even imperfectly, and to ensure that you did actually own the coins, it would have been possible to make a very healthy return. For example, for Sterling based investors, the price of Bitcoin more than doubled between 7th September 2024 and 18th January 2025.
Of course, if you had got it wrong, you could have lost a lot of money too. If you had bought Bitcoin on 4th October 2025, and sold on 22nd November 2025, you would have lost 28% of your money (in a month and a half)!
So, if you don’t mind if you lose most of the money, in exchange for the potential of making a strong return, Bitcoin could be for you. However, there are probably much more enjoyable ways of speculating!
Some recent research by Morningstar has shown that allocating up to 5% of your portfolio to Bitcoin could be advantageous, but only if you regularly rebalance this allocation, taking advantage of the volatility. That means having the discipline to sell, when the price has gone up, and to buy when the price has gone down. A holding of more than 5% would distort the risk and return profile of any portfolio. Importantly, this is new research, based on a short period of time, and it was US-based, so it may not be the case that this logic would apply in the UK. It may be that, in the future, Bitcoin could form a small part of portfolios for investors, but it seems more likely that it will continue to be a form of entertainment, rather than becoming a genuine investment.
https://www.morningstar.com/portfolios/is-crypto-good-gift-your-6040-portfolio
Philip Wise | philip@sussexretirement.co.uk
Managing Director and Chartered Financial Planner
This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
The favourable tax treatment of ISAs maybe subject to changes in legislation in the future.
The Financial Conduct Authority (FCA) does not regulate direct investments into crypto-assets or NFT’s. There are no consumer protections (including FSCS protection) for those who buy crypto-assets or NFTs. If you buy crypto-assets or NFTs you should be prepared to lose all the money you invest.
