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By Alex Diaz · How we calculate this
Bitcoin has fallen more than 70% from its all-time high on multiple occasions, including in 2018 and 2022, and each time it eventually went on to set a new high. That history cuts both ways: it's not a reason to assume a rebound is guaranteed, but it's also not a reason to assume a decline is permanent. This calculator treats a crypto purchase as a one-time expense, weighing the amount you enter against roughly three months of your budget rather than a single month's income.
These key factors affect crypto investment affordability
Volatility far beyond traditional markets
Bitcoin and other major cryptocurrencies have experienced drawdowns of 50-80% multiple times over the past decade, well beyond what a typical stock market downturn looks like. Part of the reason is structural: unlike a stock, there's no company earning revenue or generating cash flow underneath the price, so there's no fundamentals-based floor pulling it back up. Regulatory news, an exchange running into trouble, or just a shift in sentiment can move prices sharply on their own, with nothing else about the asset having actually changed.
Limited protection if something goes wrong
A bank account has FDIC insurance behind it. A brokerage account has SIPC coverage. Crypto held on an exchange has neither, which is exactly why customers lost holdings with limited recourse when FTX collapsed in 2022. Moving to self-custody sidesteps that particular risk, but it doesn't remove risk so much as relocate it: lose the private key and there's no customer service line that gets it back.
Sizing it as a speculative position
Given the volatility and the lack of protections, many financial professionals frame crypto as a small speculative slice of a portfolio, often cited around 1-5%, rather than a core holding, and only with money whose complete loss wouldn't change your plans. It's a different category of risk than a diversified index fund, and sizing it the same way tends to understate what's actually at stake.
How to use your results
- Only enter an amount you could fully lose without affecting your other financial goals
- Compare this to your other investments to see if it's a small slice or an outsized bet
- Check whether this money would be better used paying down debt or building emergency savings first
Ways to make investing in crypto more affordable
- Keep the position small relative to your overall savings and investments
- Avoid investing money you'll need within the next few years given how sharply prices can swing
- Use reputable, well-established exchanges and consider self-custody for larger holdings
- Spread purchases out over time instead of investing a lump sum at once
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