Feb 25, 2026
Amid recent volatility in the cryptocurrency market, U.S. Sen. Elizabeth Warren is sounding the alarm regarding the asset’s instability and how it might affect retirement accounts.
The representative wrote a letter to Securities and Exchange Commission chair Paul Atkin asking how the agency will protect investors after President Donald Trump signed an executive order in August that opened the door for 401(k) plans to offer investments in alternative assets, including crypto like bitcoin.
Advertisement
“For most Americans, their 401(k) represents a lifeline to retirement security rather than a playground for financial risk,” Warren wrote on Jan. 12. “Allowing crypto into American retirement accounts creates fertile ground for workers and families to lose big.”
The value of bitcoin, for example, had enormous gains in 2025, reaching an all-time high of more than $126,000 in October. But by the time Warren had written her letter, it tumbled to around $90,000, and as of Feb. 24, it had fallen further to around $64,000.
Warren’s comments reignited the ongoing debate over whether such wild swinging investments belong in retirement plans. Proponents emphasize the significant profit potential of cryptocurrencies and their role as diversifiers in portfolios. Critics, on the other hand, view them as boom-or-bust investments whose inclusion in 401(k)s could exacerbate the retirement crisis, leaving many people unable to retire and increasing the burden on the state.
The reality of investing in crypto
Cryptocurrencies are increasingly moving into the mainstream and capturing the population’s attention. As we approach the potentially widespread adoption of crypto in employer-sponsored plans, here’s what investors may want to think about first.
The risks
Warren isn’t alone in her worries about adding crypto to retirement plans. While experts may be split on the wisdom of including crypto in portfolios, many acknowledge the risks that comes with its volatility.
“The objective for the average person is to have a safe, secure retirement plan,” Jerry Schlichter, a lawyer whose firm has experience in 401(k) cases, told CNBC (1). “When you talk about new areas like cryptocurrency or private equity, these are fraught with danger for investors for a variety of reasons.”
According to iShares, between 2015 and 2024, bitcoin outperformed major asset classes, including the S&P 500, gold and the Dow Jones Emerging Markets Index, by a wide margin eight of those 10 years (2). But it was also firmly the worst-performing asset in the other two years. When bitcoin prices rise, the gains can be significant; when they fall, the losses can be severe.
The advantages
Despite its volatility, the first thing many proponents of crypto point out is its earning potential. From 2015 to 2025, bitcoin’s price increased by more than 22,000%, far outpacing the S&P 500’s roughly 440% rise, according to CNBC.
“Look back at the past 10 years, and it’s the best-performing major asset class,” Amy Arnott, a portfolio strategist for Morningstar, told AARP (3). “But there is still that question mark: is it just a speculative asset, or will it have long-term staying power?”
Advertisement
Supporters also argue that crypto reduces risk in portfolios by acting as a diversifier.
“[Cryptocurrency] could be an alternative store of value if there are declines in stocks and bonds, much like how people have used gold in their portfolios in the past,” Jay Jacobs, BlackRock’s U.S. head of equity ETFs, told AARP.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Investing in crypto wisely
If crypto ends up being available as part of your 401(k) plan and you’re wondering whether or not to invest in it, consider the following.
Do your research: Don’t invest in cryptocurrency just because of its eye-popping headline numbers. Past returns don’t predict future gains, especially with volatile assets. Before committing any money, take the time to understand what these assets do and to assess their long-term prospects and risks using objective, credible sources. If you’re still convinced, focus on the option you believe offers the best balance of price and potential.
Know what you’re getting into: Make sure you’re comfortable with the level of risk that comes with crypto. It may be beneficial if you have time on your side and are willing to weather the downturns in moments your investment loses value. Keep in mind that if a severe market sell-off occurs around your planned retirement date, you may need to delay withdrawals or adjust your strategy accordingly.
Keep allocation small: No retirement plan should rely on a single investment. In other words: don’t put all your eggs in one basket. Experts champion diversification, including a mix of assets that perform differently under various market conditions. This means balancing high-growth, volatile investments with more stable options or ones that investors historically turn to during uncertain times. Some financial professionals suggest limiting cryptocurrency exposure to 5% of your portfolio or less.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1); iShares (2); AARP (3)
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Daniel Liberto is a financial journalist with over 10 years of experience covering markets, investing, and the economy. He writes for global publications and specializes in making complex financial topics clear and accessible to all readers.
