3 Ways to Invest in Cryptocurrency That Will Let You Sleep at Night

Key Points

• Keep your crypto allocation small to reduce risk.

• Invest in large cryptocurrencies that have survived bear markets.

• Take a long-term outlook and don't spend too much time monitoring crypto prices.

• 10 stocks we like better than Bitcoin ›

Cryptocurrency investing is a wild ride. If you had bought one Bitcoin (CRYPTO: BTC) on Nov. 10, 2021, it would've cost you about $67,000. As of July 8, 2025, your investment would be worth $109,000 for an impressive 62% return -- if you held on while the price dropped as low as $16,000 in 2022.

It's hard to stay calm with that kind of volatility. No one likes to see their investments plummet in value, but that's par for the course with crypto. If you've decided to invest in digital assets, there are a few ways to make the experience less stressful.

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1. Limit crypto to a small part of your portfolio

The best way to invest in crypto worry-free is to limit how much money you put into it. You may want to start by setting aside 1% or 2% of your investment portfolio for cryptocurrency. If you feel comfortable going higher later, you could bump that up to 3%, 5%, or as high as 10%. Personally, I wouldn't allocate more than 10% of my portfolio to crypto because of the risk involved.

A reasonable asset allocation makes those inevitable price swings much easier to manage. If you have a $100,000 portfolio, and $3,000 of it is in crypto, a 50% plunge in your crypto holdings isn't a huge issue. If you have $50,000 in crypto, it's a different story.

Since cryptocurrencies have the potential to rapidly increase in value, you can still get excellent returns this way. Just remember that if your crypto investments take off, you may need to rebalance your portfolio so it doesn't become too crypto-heavy.

2. Invest in the biggest coins

I've invested in quite a few cryptocurrencies, both large and small, over the years. If I could go back and change one thing, I would've avoided the smaller altcoins and invested more of my money in Bitcoin (ideally in 2010 or 2011, given the option).

It's tempting to skip the big names and invest in coins that haven't caught on yet. Everyone wants to find a cryptocurrency that's going to explode, deliver 1,000 times growth, and turn early investors into multimillionaires.

The problem is that the crypto market has a massive number of scams, meme coins, and low-quality projects. You're far more likely to lose most or all of your money when you invest in smaller, unproven coins. Out of nearly 7 million cryptocurrencies listed on the GeckoTerminal tracking tool since 2021, 3.7 million have stopped trading. That's a 52.7% failure rate, and it doesn't include cryptocurrencies that are still trading but have lost most of their value.

To improve your odds of success, stick with large cryptocurrencies that have been around for several years or longer. Bitcoin, Ethereum, XRP, and Solana all fit this description. They're still volatile, but they've proven to be serious projects and have survived bear markets.

3. Don't micromanage your crypto holdings

Spending too much time monitoring your investments can be stressful. This is true with any type of asset, stocks included, but it's worse with cryptocurrency due to how much prices can fluctuate.

There's nothing wrong with staying up to date with the cryptocurrencies you own and the market as a whole. But try not to pay too much attention to the everyday price movements. Hopefully, you've chosen cryptocurrencies you believe have long-term value. If so, you could end up holding them for five to 10 years or longer -- more than enough time to ride out the occasional dip.

If you implement these three strategies, you can invest in crypto without any trouble sleeping at night. Limiting how much money you put into crypto is a simple and effective way to cap your downside. When you invest in proven coins, your portfolio is unlikely to be wiped out in a bear market. And if you avoid checking price charts every day, you'll save yourself a lot of unnecessary stress.

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Lyle Daly has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.