Cryptocurrency Investing in Retirement Funds: A High-Risk Proposition

The recent executive order by President Trump allowing investors to put their 401(k) savings into high-risk investments like cryptocurrency has sparked concerns among experts. Cryptocurrencies are notorious for their volatility, and investing in them during retirement can be particularly precarious due to the potential for massive price swings.

According to research, adding Bitcoin to a retirement portfolio could lead to losses five times worse than a traditional mix of stocks and bonds. This is because cryptocurrencies tend to move like a financial roller coaster, with frequent and massive price drops that can happen without warning.

The Government Accountability Office (GAO) found that the five crypto assets available to 401(k) plans were four to 12 times as volatile as the S&P 500. Research also shows that Bitcoin's volatility has been nearly 10 times higher than major fiat currencies, such as the US dollar.