Investing in bitcoin can feel a lot like riding the Cyclone on Coney Island: ups, downs and a whole lot of bumps.

In October 2025, bitcoin topped $126,000, an all-time high, before falling to less than half that by the end of June. Now, it’s surging again, recently surpassing $84,000. Despite the volatility, crypto adoption among advisors is growing. Last year, 42% of independent RIAs reported allocating to crypto in client portfolios, up from 28% the year before, according to a Bitwise and VettaFi survey. Meanwhile, roughly $2.7 billion has flowed into BlackRock’s iShares Bitcoin Trust (IBIT) in the past month, a sign of continued investor demand for the asset.

So, is crypto becoming a standard component of portfolio construction? Should every portfolio have at least a little bitcoin? Some advisors see meaningful opportunities in digital assets, while others remain skeptical. “Most advisors are still relatively cautious,” said Amy Arnott, portfolio strategist at Morningstar. “People would want to see a bit more price stability first.”

Big Money. Big Whammy

Bitcoin certainly has high-return potential:

• Over the past decade, its price has surged roughly 14,000%, vastly outpacing the S&P 500’s roughly 300% total return, including dividends.
• But those returns come with dramatically greater volatility. bitcoin fell 74% in 2018 alone.

That volatility is part of the appeal, though, said Mark Stancato, founder of VIP Wealth Advisors, who views the category as a legitimate asset class for investors who can tolerate the swings. For those clients, he typically allocates about 5% to digital assets. “Large enough that success can matter, but small enough that a major drawdown shouldn’t derail the financial plan,” he said.

Kevin Feig, founder of Walk You to Wealth, recommends going further: an 8% to 15% bitcoin allocation, where appropriate. He views bitcoin as a scarce, collectible-like asset and said its historically low long-term correlation with stocks, bonds and gold gives it diversification potential. He also said bitcoin and other digital assets will become standard options in 401(k) plans and target-date funds. “We’re still early, but institutional adoption is accelerating fast,” he said.

Don’t Know What You Don’t Know. But bitcoin’s volatility and speculative nature make it difficult to evaluate, said Nathan Nicolaisen, founder of Redspire Wealth Management. Unlike a stock, where fundamentals or a new product can help explain price movements, bitcoin’s drivers are often less clear. “It could be a simple rotation out of other assets, or it could be based on fears of inflation,” he said.

Nicolaisen also pointed to crypto’s limited regulation and lack of income generation. Bitcoin has variously been pitched as a store of value, payment system, alternative to gold and speculative asset. “The narrative around cryptocurrency, primarily bitcoin, has shifted so much that it’s unclear what purpose it serves in a portfolio,” he said.

What happens in private can make a big difference.

Private markets are a growing asset class for high-net-worth clients, potentially offering less volatility and higher returns than public markets. As businesses stay private longer, more capital formation is happening there: Some 80% of companies with revenue over $100 million are now private, per BlackRock. But private fund managers, especially in private equity, show far more variable performance than public managers, making manager due diligence critical.

“The dispersion across managers between good and bad is large,” said Phil Bauer, portfolio specialist at Calamos Investments. “You want to make sure that if you’re going to invest in these markets, that you are investing in managers that have done this, that have the expertise, that are not tourists, that have a long track record of doing it. That’s where a lot of the excess returns come from.”

Mind the Gap

Return dispersion is almost seven times wider for private equity than for large-cap public equities: There’s a gap of more than 19 percentage points between top and bottom quartile managers, versus about 3 percentage points for public equities, according to research from Moonfare, a private markets platform. Spotting misaligned interests between manager and advisor is a crucial part of due diligence, said Ben Sayer, alternative investments group head at MAI Capital Management. “We’re always looking for ways where it’s that classic Wall Street ‘Heads I win, tails you lose,’” he said. “If you’re walking away with a big performance fee and our clients are not having a good outcome, that means I did something wrong, and we structured this fund very, very poorly.”

Monish Verma, managing partner at Vardhan Wealth Management, suggested several other things his team keeps in mind:

• Team structure: In some cases, “we found the principal retired, and so they’ve replaced the head person with someone else,” Verma said. This then requires further questions about the integrity of the manager’s data.
• Style drift: “We’re looking for things that are not normally done within the mandate that’s been set forth of why we would use that investment,” he said.

Your Favorite Alt’s Favorite Alt. Given the proliferation of alternative investing, one area of interest for Sayer’s team is general partnership staking, which is essentially buying a minority interest in an alternative investment manager. “Not only can you buy a private-equity manager, you can buy a piece of a real-estate manager and a venture manager and a private-credit manager and infrastructure manager,” Sayer said. “You’re diversified across the landscape of alternatives, and then you’re also hopefully participating in what we believe is continued growth in alternatives over time.”

At least it’s not the ’80s, and not just because VHS tapes are inconvenient and low quality by modern standards.

Rather, interest on 30-year fixed-rate mortgages peaked at over 18% in 1981 and barely dipped below 10% during the full decade, which makes today’s rising loan rates seem downright cute. There’s more to the story than that, though. The Fed’s recent 0.25% rate hike, which brings the target rate to 3.75 to 4%, complicates things for real estate investment trusts and private real estate. In part, asset owners might be expecting less capital appreciation than in lower-rate environments, though they may be hoping for more income from their investments. But across the board, refinancing is getting both more cumbersome and more expensive.

“The effect is on the entire real-estate finance market itself,” said Dan Valenti, partner at Troutman Pepper Locke. “For our clients where real estate is all of what they do … they’re all feeling the same pressures from it.”

Re: Financing

Two metrics used in the real estate business — loan-to-value ratios and debt-service coverage ratios — affect the rates borrowers can get. Higher capitalization rates have notched up loan-to-value ratios, and consequently, borrowers may have to come to the table with more equity or collateral than they previously would have, Valenti said. And the larger amounts borrowers must spend on debt service can also trigger features in loan documents like access to cash, which may now be more restricted, he noted. “We have not just the [rate] increase now but signals that there may be another increase in the future,” he said. “People are cognizant of that and are pricing that in right now.”

For investors, it’s becoming more crucial to own the right types of properties, said David Lebovitz, head of alternatives investment strategy at JPMorgan Asset Management. Historically, if inflation and interest rate changes were even, real-estate investments generally saw higher income and capital appreciation over time, he noted. But inflation going down and interest rates going up is a ding on capital values, making income more important, he said. “We want to make sure that the assets are going to be able to grow their rental rate,” he said. “We’re not making big bets on a whole lot of capital appreciation.”

Some of the opportunities he said the company sees in real estate include:

• High-quality office space, retail and industrial complexes focused on things like advanced manufacturing.
• Higher demand for premium spaces, as office renters want features like tech-enabled meeting rooms and manufacturers need more sophisticated amenities than ever.

‘I Believe You Have My Stapler.’ Office space is getting harder for small- and medium-size businesses to secure as rents go up, but the higher prices don’t necessarily mean that vacancy rates will rise, Lebovitz said. Even though working from home remains common, more big companies (JPMorgan included) have employees back in the office five days a week, and they have the deep pockets to pay for premium spaces, which is important for the types of properties investors own. “It’s going to be a tale of two offices,” he said. “There has been a bifurcation in the way that different people work, and every single worker is not going to be in an office going forward.”