Retirement-account holders alternated between terror and relief in recent weeks as the S&P 500 -- the index that most people's 401(k)s track -- nearly entered bear market territory before recovering all of the losses.
Cryptocurrencies suffered similar volatility, but a recent surge in the price of bitcoin has left the signature digital asset up 15% so far this year. The S&P 500, by contrast, is essentially flat in 2025.
A wider disparity stretches back to last spring. Over the past year, the price of bitcoin has soared 54%, while the value of the S&P 500 has jumped 11%.
The trend poses a question for retirement portfolios: Should you add crypto?
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The choice, analysts said, comes down to an account holder's tolerance for risk. Crypto promises potentially large gains but threatens similarly significant losses, since the asset frequently experiences price swings, they said.
A small holding could bear outsized returns while risking only limited damage in the event of a downturn, analysts told ABC News, but they cautioned against a large investment of retirement funds.
"There's potential for growth, but there's also big downside risk. So it really depends on how much risk the individual is willing to bear," Reena Aggarwal, professor of finance and director of the Georgetown Psaros Center for Financial Markets and Policy, told ABC News.
In recent weeks, some major financial firms and a federal agency have signaled a friendlier posture toward retirement investment in crypto.
Last month, financial services giant Fidelity launched a crypto IRA account, allowing investors to put retirement funds directly into popular cryptocurrencies bitcoin, ethereum and litecoin.
The Department of Labor on Wednesday rescinded previous guidance urging asset managers to exercise "extreme care" before investing retirement funds in cryptocurrency.
Instead, the agency said in a statement it would strike a neutral stance toward those who consider "the inclusion of cryptocurrency in a plan's investment menu is appropriate."
Such developments mark the latest signs of mainstream adoption for crypto. Regulatory approval of Bitcoin ETFs -- Exchange-Traded Funds – last year helped send the price of the world's largest cryptocurrency soaring.
Institutional adoption of cryptocurrency establishes greater clarity and trust in the market, but the assets remain highly volatile, Aggarwal said.
"Institutionalization does make things less risky because it brings transparency," Aggarwal said, while cautioning that there are still "huge movements in price."
The price of bitcoin, for instance, experienced a decline of at least 45 percentage points four times over a five-year period ending in 2024, Bryan Armour, the director of passive strategies research at financial firm Morningstar, found in a report last year.
Still, the overall trend for bitcoin in recent years has shown massive gains. The price of bitcoin has soared 1,043% over the past five years, far outpacing an increase of 94% for the S&P 500.
"When you buy crypto as an investment, you're betting that the value will go up, but there's no guarantee that it will, and in fact, prices can drop pretty steeply," Kate Ashford, an investing specialist at NerdWallet, told ABC News.
"It's a relatively new asset class and even the experts aren't entirely clear on why crypto prices move around the way they do," Ashford added.
An account holder may find value in dedicating a small share of their portfolio to crypto, as long as the individual is willing to lose the holdings in the event of a downturn, analysts said. Digital assets, they added, can help diversify a portfolio and present the possibility of significant upside.
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"If you're dying to have some crypto in the mix, it may be smart to treat it like a high-risk stock and only dedicate a small percentage of your portfolio -- or only as much as you can afford to lose," Ashford said.
The asset may be a more attractive investment for relatively young investors, since they retain a long-term opportunity to recoup possible losses, Aggarwal said. For older investors, she added, the move could pose considerable risk.
"If things go south, they may not have enough time to turn it around," Aggarwal said. "For younger people, there's still a chance to recover."
Should you add crypto to your retirement account? Experts weigh in originally appeared on abcnews.go.com