Is Bitcoin Safe?

The short answer: No. No investment comes without risk, but Bitcoin is a particularly risky investment with more volatility than traditional investments, such as stocks, bonds and funds.

If you decide to buy Bitcoin, it's a good rule of thumb to invest only what you can afford to lose and take measures to protect your assets.

Here are some key things to know.

The value of Bitcoin can be extremely volatile

Many investors piled into Bitcoin after it broke the $20,000 barrier in December 2020 and continued its bull run through much of 2021. But in the months after, the price began a long decline, with the spot price falling below $16,000 in November 2022. It has since recovered once again, hitting a series of new records in 2024 that sent its price over $70,000.

Longtime investors in cryptocurrency have seen this before. Unlike traditional financial exchanges, crypto markets don't have circuit breakers, which automatically pause trading when prices dive or rise too quickly. This means prices could move up or down much faster than traditional investments.

So when investing in Bitcoin, understand that the value can drop quickly — and may take years to regain previous highs.

» Learn more: How to invest in Bitcoin

Crypto exchanges can fail

If you're keeping your crypto with the same exchange where you bought it, as investors frequently do with stocks and bonds, it's worth considering that crypto exchanges have failed before.

Consider major exchanges FTX and FTX.US, which filed for Chapter 11 bankruptcy on Nov. 11, 2022.

Keep any Bitcoin cold storage device safe

If you want to avoid losing your assets on a crypto exchange, transfer them to a separate crypto wallet. Specifically, consider a cold wallet, which is an offline storage device, much like a USB stick, rather than keeping the crypto stored on a hot wallet, or one that is online. Cold wallet storage can help eliminate the risk of online theft, and such devices range in cost from $100 to $200.

But cold wallets aren't without risk. You'll have to keep your password and seed phrase — sometimes called recovery phrase — safe so you can access your funds. And you'll also need to keep the physical device holding your Bitcoin safe.

» Looking for a wallet? Here are our picks for the best Bitcoin wallets

Watch out for Bitcoin scams

When Bitcoin gains in value, so do the number of scams targeting Bitcoin investors. Many scam websites seem credible due to cryptocurrency jargon and fake testimonials, according to the Federal Trade Commission.

Also beware of phishing scams in which you receive emails that appear to be from a cryptocurrency exchange but are actually attempts to get you to reveal your passwords. The emails can appear legitimate, with correct logos and branding. Experts recommend not clicking on any links in these emails, and to contact the exchange directly if you get suspicious communications that ask for your password information.

Investing in Bitcoin and other cryptocurrencies is risky

Risk is inherent in any investment, but especially with Bitcoin and other emerging cryptocurrencies.

It’s important to take the long view with your investments, to keep your overall portfolio in balance, and never to purchase more Bitcoin (or any single speculative investment) than you can afford to lose.