Crypto Investment Decisions for 2025 (Avoid These Mistakes)

Hey everyone, welcome back to We're Talking Money. I'm Phil Clark, and today we're diving into one of the hottest topics in finance right now, and that is cryptocurrency. It's been on a roller coaster ride. The rally has just been grabbing headlines, and it seems like that's not going to stop anytime soon.

But the real question is, what's behind this surge? Why is it rallying so much? Is it a sign of things to come, or is it just another bubble that's waiting to burst? And most importantly, should you consider crypto as part of your investment [Music] portfolio?

First off, let's talk about this recent rally with Bitcoin, Ethereum, Solana, Doge and so many other cryptocurrencies. They have seen such a significant uptick in value.

I'm still confident Bitcoin's going to close much higher before year end. Before year end, for year end? Yeah. So break $100,000 before the end of the year? Yeah, well above 100,000 before year end. It's just a matter of time.

What's driving this? Well, I can tell you it's more than one thing. There's a few factors at play here. First, there is an increased institutional interest, and what I mean by that is that large companies and institutional investors, they're jumping into the crypto trade. They're adding credibility to the crypto trade because of all of the buying, and it's creating a lot of liquidity in the market.

You have another dynamic happening at the same time, and that is registered investment advisers, or RIAs. They've been more sidelined about this subject, but in the recent, say, 12 months they've been getting into the trade in a pretty significant way.

Number two, you've got regulatory developments. Now, positive signs such as ETF approvals. SEC approved ETF applications from 21Shares, Bitwise, BlackRock, Fidelity, iShares, some other fairly clear guidelines about where crypto could go. A lot of this is fueling investor optimism. In fact, you saw crypto really take off when those ETFs were approved. Of course, the biggest one is President-elect Donald Trump seems to be a huge supporter of crypto.

United States will be the crypto capital of the planet and the Bitcoin superpower of the world, and we'll get it done.

Now, number three is macroeconomic trends. I'm talking about things like inflation and the stability of our fiat currency. Many investors are turning crypto into something of a hedge, and so you might think of it as more of a modern-day gold.

But the question is, does this major rally mean that crypto is now a safe bet? Well, not so fast. I want to discuss the risks with you so that you go into this thing with eyes wide open.

First, it's volatility. Cryptocurrencies are notoriously volatile. These things move around a lot. In fact, a 20% drop in a day, that's not uncommon. If you go back just two years ago, we saw Bitcoin fall more than 60% in just a matter of weeks. Not for the faint of heart. The volatility can be pretty disconcerting.

Number two, it's regulatory uncertainty. So what we know is that governments worldwide, they're still figuring out how to regulate crypto. A single decision from governmental agen or bodies around the globe, really, that could send prices of crypto soaring to new heights that no one's talking about, or it could send them crashing in a huge way.

And number three, of course, is security risks. So hacking, scams, fraud, they're all prevalent when it comes to crypto, and if you're not careful, you could actually lose your investment. If you're planning on buying crypto, you need to research your storage options.

Number four is the speculative nature. And so unlike stocks or bonds, crypto doesn't generate any cash flow. Its value, it's entirely dependent on market perception. In fact, it's a classical emotional trade.

Is crypto a good investment? It all depends on your goals and your tolerance for risk. Here's what I often say to our clients here at OmniStar. First, start small. If you're new to crypto, allocate only a small portion of your portfolio. If you must stick your toe in the water, do it carefully. Think of it as a speculative investment. It's not a core holding. Something this volatile could really leave you in a bad place if you suddenly needed to sell your crypto when it's declined 30, 40, 50, even 60%, maybe more.

Next, it's doing your research. Understand what you're investing in before you take that leap. Bitcoin is not the same as Ethereum, for example, and altcoins, it can be even riskier. In other words, this is not a level playing field, and many investors, they just follow the crowd.

Next, you want to think diversification. So you don't want to put all your eggs in one basket. You've heard that story many, many times. A well-balanced portfolio can help you reach your goals and objectives more effectively.

And next, it's thinking long-term. Short-term investors of are the ones that tend to get burned. Forget about day trading. If you believe in the future of blockchain technology, and frankly I don't think it's going away, then treat crypto as a long-term plate, much like you would do any other investment. Buy it, hold it. That's our preferred play.

So are you ready to buy some crypto? Whether you are or not, before you do it, there is a litmus test that I think everyone should take before jumping into this volatile investment. Question one, how much risk are you willing to take? Number two, can you afford to lose this money? Number three, do you have a diversified portfolio to cushion potential losses? Number four, will you need any of this money for income? And number five, are you investing based on research or hype?

Depending on how you answer, crypto may be suitable, but it's not for everyone. I recommend that you always consult with your advisor or investment professional before you make these major investment decisions. And for you do-it-yourselfers, spend some time researching before you take the plunge.

Regardless of what you do, let's take a minute to talk about where crypto might be headed. We don't have a crystal ball, but it is clear to me that blockchain technology, it isn't going away. It's going to be here in some form or fashion, whether this rally that we've been experiencing over the last few months leads to a sustained growth or another downturn. The key to crypto investing is staying informed and making decisions that align with your financial goals, and avoiding this FOMO, or fear of missing out.

Now, if you found today's discussion helpful, give this video a thumbs up, share it with someone curious about crypto, drop your comments below, I'll get back to you as quickly as I can, and hit that subscribe button for more money insights. Thanks for tuning in. I'll see you next time on We're Talking Money.