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Beth Pinsker: Crypto’s ‘true believers’ crave being all-in, all the time. Here’s how they might learn to protect themselves.

Despite bad news about cryptocurrencies — the monumental price drops, the bankruptcies, the thefts, the corruption — true believers aren’t looking for a way out. In fact, it’s usually the opposite.

Financial adviser Chelsea Ransom-Cooper has a client who had large holdings of cryptocurrency that he sold last year, making incredible returns. For early adopters, total returns on bitcoin

and ethereum

from 2015 to the peak in 2021 could be upward of 4,000%. 

What’s the client doing now with all that cash?

“Looking for an opportunity to buy more crypto,” says Ransom-Cooper, managing partner at Zenith Wealth Partners in Philadelphia. 

Another client won’t get out at all, despite suffering steep losses on paper.

“We talk about the value of a diversified portfolio and not being overly concentrated in crypto, but when you have such a high risk tolerance, the only thing attractive is another high risk,” says Ransom-Cooper. 

So even though bitcoin is down more than 60% this year — over three times the decline in the S&P 500 Index

of the largest U.S. companies — the potential for stratospheric returns on cryptocurrencies can be enticing. And it makes getting 3% in a high-yield savings account or 4% in Treasury inflation-protected securities (TIPS) seem ridiculous. 

“Nobody wants to get rich slow,” says Ryan Losi, a CPA and executive vice president at PIASCIK, based in Glen Allen, Virginia, who handles a lot of clients with cryptocurrency holdings. “But a lot of people who come into riches quickly don’t know what to do with that money, like people who win the lottery. You look down the road and they have zero.”

Defining goals

For crypto investors, the all-in mentality can be tempered by one of the first steps of financial planning, which is setting goals. 

“You have to ask: What is the purpose for the money? Fun doesn’t have to be antithetical. But thinking that it’ll be a continuous windfall is not how our markets work,” says Amanda Clayman, a financial therapist based in Los Angeles. 

Financial adviser Doug Boneparth, who has an interest in crypto himself, has had many conversations with his clients about goals as a way for them to figure out when they’ve reached them, and then they’ll know it’s time to get out. If you stay in, you might get to your goal sooner, but you might also very well miss the opportunity to get there at all. 

“You need to have a plan in place that can be your North Star to make tough decisions. Say you did well, and maybe you shaved five years off your ability to retire. Does that motivate you to lock it in now, or do you want to let it ride?” Boneparth asks. 

Psychologically, this comes down to what’s enough. “You have to know what your enough is,” says Ransom-Cooper. “Is it the point where you’re fine, and if you get more it’s great? But if you don’t, you’re also fine because it’s enough?”

Anti-Wall Street sentiment

Investor sentiment on crypto can vary based on when you first purchased the investments.

“If you bought it in November of last year, you might want to vomit,” says Erika Rasure, a financial therapist who is a crypto enthusiast and runs a community called Crypto Goddess. That being said, she still sees those green-around-the-gills investors staying on the roller coaster ride, including herself. “I’m just going to sit and see where it goes,” she says. 

Clark Shi, a CPA and senior director at Dimov Tax, has been helping clients with their crypto taxes since 2017, when he first started to see big gains.

“People turned their portfolios from $20k to $200k within a few months,” he says.

What did they do? Reinvested. Then there was a market crash in 2018, before another upswing, and they kept repeating the cycle. Chalk it up to “the human nature of chasing more profit when they already made a profit previously,” says Shi. 

Losi has been able to persuade some clients to diversify.

“I had some that bought small businesses, some bought land or rental real estate. I’ve seen plenty that bought their first homes too — for all cash,” he says. “But I can say that not many traded their crypto for what I’d call investment-grade securities. A lot of them are anti-fiat currency and anti-Wall Street, and it’s almost impossible to convince them to buy into that asset class.”

The thinking behind some of Losi’s clients is that every time they have gains, they think it’s not the right time to sell, because it might go up even more tomorrow. And if they’re losing, nobody likes to admit it or take their chips off the table.

“They should be putting money in safe stuff. You can get 4.5% on a bond. You can get 3% in a savings account. That’s pretty damn good. If I’m paying 3% on my mortgage, then the bank is paying for my mortgage every month,” says Adam Markowitz, a tax professional based in Florida who has developed an interest in cryptocurrency issues. 

Nevertheless, the true believers hang on, even those who understand the fundamentals of investing.

“The one thing I haven’t lost faith in is bitcoin,” says Boneparth. “Everything else looks pretty shaky. But that’s OK. It’s not dead. It’ll continue to evolve.”

Got a question for “Fix My Portfolio” about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at  

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