Buy Bitcoin: Understanding the Risks and Rewards

Many investors buy Bitcoin without appropriately calibrating their expectations. It isn’t a magic bullet, nor is its protocol completely immutable, as some claim. Bitcoin (CRYPTO: BTC) has experienced a 45% drop in value over the past six months. This volatility can be unsettling for new investors, but it’s a completely normal part of the asset’s history. Before committing your funds, it’s crucial to understand what you’re signing up for.

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Bitcoin’s Reputation and Volatility

Bitcoin has a reputation for creating millionaires, but gains aren’t guaranteed. In 2025, Bitcoin’s annualized volatility clocked in at around 42%, lower than in previous years but still roughly four times the stock market’s volatility. Since 2015, Bitcoin has entered a bear market (a 20% or greater decline without recovery) approximately 34 times, compared to just twice for the S&P 500.

This means you should anticipate periods, potentially lasting a year or more, where your investment loses value. For example, Bitcoin’s 2022 drawdown was a significant 77%. If such a decline would prompt you to sell, cryptocurrency might not align with your investment goals.

Long-Term Investment Horizon

Whether you’re attracted to Bitcoin’s scarcity, independence from central banks, or growing institutional adoption, these are all long-term narratives. There’s no “get rich quick” scenario firmly grounded in facts. Over 95% of the 21 million Bitcoin possible have already been mined, and the next halving event isn’t until April 2028. While halvings impact price, their effects unfold over quarters or years.

Similarly, the idea of Bitcoin as a hedge against currency debasement is compelling, but Bitcoin hasn’t yet survived a prolonged inflationary cycle while maintaining its value. Institutional adoption is real, but still in its early stages. A minimum five-year holding period is a reasonable baseline to mitigate risk.

The Human Element Behind Bitcoin

Bitcoin lacks a traditional corporate structure with a CEO or board. However, its open-source protocol is maintained by a small group of around 41 core developers, with five authorized to merge code changes. Bitcoin Core, their software, runs on approximately 90% of full nodes, giving them significant influence over the protocol’s direction.

On the capital side, Strategy (formerly MicroStrategy) and its chairman, Michael Saylor, hold roughly 3.6% of the total Bitcoin supply. Saylor’s buying (or selling) decisions can directly impact the asset’s price.

Is Bitcoin a Good Investment?

This doesn’t necessarily mean Bitcoin is a bad investment, but it does expose you to human-centric risks that many investors overlook. Before investing in Bitcoin, consider that The Motley Fool Stock Advisor analyst team recently identified 10 stocks they believe are the best buys right now… and Bitcoin wasn’t one of them. Their past picks have yielded impressive returns – Netflix (532,066%!) and Nvidia (1,087,496%) are prime examples. With an average return of 926%, Stock Advisor consistently outperforms the S&P 500. See the 10 stocks »

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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