4 Things to Know About Investing in Cryptocurrency

Bitcoin was all the rage when its value surged in 2017, positioning early investors for a hefty profit. Though the price of this particular cryptocurrency has dropped gradually over the past few years, the excitement left investors wondering whether these types of investments were a smart move. Here are a few things you should know when considering cryptocurrency as an addition to your portfolio. 

1. Understand the concept of cryptocurrency and its history.

The famed investor, Warren Buffett, said it best, “Never invest in a business you cannot understand.” While cryptocurrency is not a business in the way that we’re familiar with, the sentiment still rings true. Research different types of cryptocurrencies, the history of their value, and any other information that you can get your hands on. Because cryptocurrency has always been digital, many are unsure of what it is and how it fits into the financial world, making it a serious risk for those who are uninformed.

We can quickly grasp the concept of investing in businesses because it’s all we’ve ever known, and companies have intrinsic value. But cryptocurrency is the new kid on the block when we compare it to the age of other investment opportunities. Understand cryptocurrency fully before ever considering it, and invest with caution.

Tip: Begin your research with Bitcoin to follow cryptocurrency’s story from the beginning.

2. Consider the risk of investing in cryptocurrencies. 

Investing in the stock market is a risk. Investing in cryptocurrency is a risk. However, there is one big difference between these two: the stock market has been around longer, we know more about it, and we have a lengthy history of trends to refer back to. Though we can’t predict the future of any investment, cryptocurrency is a bit more of a gamble. It has been volatile since its beginning—making it an investment decision that many are leery of, regardless of potential gain. 

Beyond the lack of trend history, one must also consider that cryptocurrencies are not regulated in the way that stocks are. At its base, cryptocurrency is simply computer code, and anyone can create a cryptocurrency for a range of reasons. However, stocks are reviewed and audited by the government and exist in a slightly more standard form, having been created to raise funds for a company. 

3. Be willing to lose your investment. 

We are not suggesting that losing your investment is a guarantee, just that cryptocurrency carries a severe amount of risk. One thing to understand about cryptocurrencies like Bitcoin is that its volatility can serve you well or drain your investment. In late 2017, Bitcoin shot up to around $20 thousand and, as of October 2020, had fallen to around $13 thousand dollars. 

Unlike Bitcoin, we understand the stock market well enough to have confidence that it will likely keep growing, and that patience with our stock investments can typically lead to growth—we cannot speak to the value of Bitcoin with that same confidence.

4. Consult your advisor about how cryptocurrency fits into your strategy. 

If you are interested in investing in Bitcoin or another cryptocurrency, talk to your advisor about how that fits into your long-term strategy. It is not wise to devote a large portion of your portfolio to cryptocurrency. Still, a small percentage may be a diversification opportunity that you and your advisor can explore together. 

Please contact your advisor with further questions about Bitcoin and other cryptocurrency investments to determine how they work with your unique financial situation.  

Contact us today to schedule a consultation.

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Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.