Although crypto is a small part of the 401(k) plan market, it could grow substantially in 2025. Views are mixed about how much crypto to add to retirement savings or if it's wise to allocate any at all. Some financial advisors say crypto can work for a 401(k) plan because its movements are unconnected to the stock market and it functions even if a fiat currency is devalued.
'Crypto should be a part of a 401(k) plan because it's a non-correlated alternative asset class,' said Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management in Washington, D.C. 'With that said, investors need to ensure that they take their risk tolerance and time horizon into account which will define the target allocation,' said Johnson, who is also a member of the. 'The more volatile an asset class is, the less you need of it in the portfolio because you presumably get more bang for your buck.' Other experts point to volatility and risk as reasons to be conservative. 'People saving for retirement should probably be even more conservative, because adding crypto to a 401(k) plan would significantly increase the risk that your retirement nest egg could suffer a large loss at the wrong time,' said Amy Arnott, a chartered financial analyst and portfolio strategist with Morningstar Research Services. Morningstar found that since September 2015, bitcoin has been nearly five times as volatile as U.S. stocks, and ether nearly 10 times as volatile. That type of volatility adds a large risk to a portfolio even with a small amount investe
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