Bitcoin’s surge and new EU rules have pushed crypto back into the spotlight. For Irish savers, the question is whether it belongs in their portfolios or remains a gamble for risk takers. With values near record highs and mainstream fund managers now embracing them, digital assets have re-entered the financial conversation. But their extreme volatility raises a dilemma: are they a suitable home for people’s savings or simply a high-stakes punt for those willing to risk it all?
Cryptocurrency is a digital form of money that operates outside the control of banks or governments. Instead of relying on a central authority, transactions are verified across a public network of computers and recorded on a shared ledger called the blockchain.
“Bitcoin was the first cryptocurrency and remains the largest and most well known, making it the familiar entry point for most people,” says Nick Charalambous, managing director at Alpha Wealth.
Crypto is back in the headlines again due to it rallying by more than 90 per cent in the past year. “It can be hard to put a finger on what exactly was behind this rally, but a combination of rising institutional interest following the approval of spot Bitcoin ETFs, interest rate cuts, the Bitcoin halving in April 2024, and renewed retail and media hype all contributed to crypto’s dramatic comeback,” says Charalambous.
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“In my opinion, I don’t see an issue with people allocating a portion of their savings to crypto. However, this allocation should be relatively small and part of a broader, well-diversified portfolio that includes less volatile investments such as stocks and bonds,” he adds.
“The suitability of crypto also depends on the purpose of the savings. If the savings are intended for the short term – within a five-year horizon – then I would not recommend investing in crypto due to its extreme volatility.”
He continues: “In Ireland, investment funds are typically assessed on a risk scale from one to seven, with a high-risk fund classified as a six. In my view, crypto would fall somewhere around an eight – effectively off the scale in terms of risk.”
The Central Bank of Ireland has issued similar warnings, stressing that investors should be prepared to lose all the money they put into crypto.
However, despite those warnings, it appears that crypto will be around for the long haul. “With major companies and financial institutions now buying in, and with regulators starting to set clear rules, it looks like cryptocurrencies are here to stay,” says Charalambous. “While the market is still very unpredictable, its growing use in real-world technology and the approval of investment products show that crypto is becoming a more established part of the financial world.”
Charalambous points out that when buying and owning crypto directly you are your own bank, which means you are entirely responsible for the security of your funds; losing your private key will result in a permanent loss with no recovery option.
“This is different when you buy cryptocurrency through a platform like Revolut,” he explains. “In that case, you’re not actually buying the cryptocurrency itself but rather a beneficial interest in it. In other words, you don’t directly own the coins – instead, you hold a stake in Revolut’s overall pool of crypto assets.”
He adds that risks go beyond ownership structures. “The market is extremely volatile and prone to scams, so it’s critical to be cautious and sceptical of any promises of easy or guaranteed returns. On top of that, the tax implications of buying, selling or using crypto can be complex and vary by country, which makes it essential to keep good records and seek professional advice.”
Compared to other alternative assets like gold and tech stocks, cryptocurrencies are on the extreme end of the risk-reward spectrum, says Charalambous. “Gold is a store of value and a hedge against inflation, and it’s generally seen as the most stable, historically with lower returns. However, this has recently been challenged, as gold prices have nearly doubled in the past two years, driven by its appeal as a safe haven amid global economic uncertainty.”
Regulators and central banks are likely to shape crypto’s future by creating clearer rules for the market and developing their own digital currencies called central bank digital currencies (CBDCs), he adds:. “This effort to establish regulatory clarity aims to bring crypto into the traditional financial system and protect consumers. The development of CBDCs allows central banks to maintain control over monetary policy in an increasingly digital world.”
