Cryptocurrencies are no longer a fringe phenomenon in finance and some parents are considering them as an investment to save money for their children .
A recent survey found that nearly half (45%) of U.S. parents who own cryptocurrency have already considered setting aside some of it for their children’s futures. An additional 40.6% plan to do so soon.
CouponBirds surveyed 1,046 parents in the United States between January and March of this year to see how they felt about investing in crypto for their children.
The main reason why parents bought cryptocurrencies for their children was related to the confidence in future growth. Other reasons that pushed them to invest in crypto in the long term were related to the level of education and the currency devaluation.
Most advocate approaching these investments with a long-term , “set it and forget it” approach. The intention is to leave the capital intact until it is needed by the children.
Danny Baer, chief financial officer at insurance firm Meanwhile Bitcoin , meanwhile, explained that instead of looking at Bitcoin as a quick way to make money, it’s wiser to think of it as a long-term investment.
So far, each drop in the price of Bitcoin has been greater than the peak of the previous cycle. In effect, the asset has been on a 15-year rally .
Long-term investment opportunities
The long-term potential of cryptocurrencies like Bitcoin is a matter of debate.
While some believe they could become mainstream, there is no guarantee of that. Yet, given the high volatility of the market, advisors usually recommend considering cryptocurrencies as a long-term investment. Ideally, you should own them for at least ten years .
Identity.com CEO Phillip Shoemaker says the key to investing in Bitcoin is to make frequent, small purchases. You buy it, keep it safe in a hardware wallet, and that protects it for the long term.
“That’s with assets like Bitcoin, not the more speculative altcoins,” he told Cryptonews. “That’s one of those things you should do. Gold is a good investment, but Bitcoin is dwarfing all that stuff. So yeah, I would recommend it.”
Portfolio diversification
Cryptocurrency’s roller-coaster price swings, potential security breaches, unclear regulations, and relatively short lifespan create a challenging landscape to invest in.
Kelly Ferraro, CEO of River North Communications , says parents should carefully consider their risk tolerance before investing. They should also think about the long-term time horizon of the investment and how it would help diversify their children's overall portfolio.
For a smart approach, consider speaking with a financial advisor and investing a manageable amount as part of a diversified portfolio.
“Understanding the legal and tax implications of investing in cryptocurrencies in your country is crucial,” he added.
“Ultimately, the decision should be in line with the family’s financial goals, risk tolerance, and commitment to staying informed about the ever-changing cryptocurrency landscape.”
Scarcity's weight in determining Bitcoin's value
Investors should consider the limited supply of Bitcoin . This is a key element that makes the difference compared to the current monetary system where central banks mint new banknotes in a theoretically unlimited way.
Frank Corva, senior digital asset analyst at Finder , is in favor of investing in Bitcoin for children. He calls it an “excellent move.” He has also predicted a significant increase in the price of Bitcoin, going so far as to say that it could reach $1 million by 2030 due to its “perfect scarcity.”
“Assets like ETH and SOL don’t have a cap, which makes them a bit more uncertain as long-term investments.”
Corva added that parents should also consider their ability to hold onto the tokens for such a long time. Unlike traditional investments, individuals must take charge of managing digital assets using a hardware wallet like Trezor. And that requires technical knowledge and familiarity with key security practices.
Negligible consequences on small percentages
The future of cryptocurrency, like any investment, is difficult to predict with certainty. Years or decades from now, it is unclear how the market will have evolved.
However, diversifying your money across different assets could improve your returns. Limiting risk is also important, says Stephen Kates, principal financial analyst at RetireGuide.com .
“There is little harm in using small, single-digit percentages of investment in the context of a specific savings strategy,” he said. “Any parent looking to buy Bitcoin for their children should consider spreading the money spent across a well-diversified investment strategy.”
Kates explained that expert traders focus on position structure and risk management. Mastering these skills is the ultimate weapon in your investment arsenal.
