Buying crypto won’t save you from financial anxiety – it might make it worse #CriptoNews

Donald Trump is delivering on his promise to be a “crypto president.” He’s taken steps to study the feasibility of stockpiling cryptocurrency following his crypto-friendly campaign to return to the White House. And he’s launched his own meme-coin.

For some investors, that’s all the encouragement they need to pile into bitcoin, ethereum, and other digital assets. After all, if this U.S. administration is going to push for pro-crypto policies, shouldn’t you get in before the next boom? Does it also legitimize voices who say holding crypto will save you from some kind of reset of the monetary system?

Not so fast. With uncertainty over global trade, the markets, the cost of living and more, financial anxiety in general is high. One of the tenets of personal finance is that having an emergency fund helps one weather a variety of financial storms. And this buffer also serves to reduce financial anxiety.

But new research published in the Review of Behavioral Finance suggests that crypto investors don’t get the same psychological benefits from emergency savings, and furthermore, they tend to be more financially anxious during uncertain times than non-crypto investors. In other words, even people with a financial cushion feel less secure if they’ve also put money into digital assets.

Many investors believe that crypto is a hedge against uncertainty. Part of the logic is that if traditional markets are unpredictable and inflation is eating away at savings, moving money into crypto provides a form of protection. The problem is this theory doesn’t hold up in reality.

The study examined how crypto investments affect financial anxiety, especially among those with rainy-day savings. The findings were clear: while having emergency savings generally reduces financial stress, this benefit is significantly weaker for those who invest in crypto.

Why? Because crypto’s extreme volatility doesn’t provide peace of mind – it fuels stress. When markets tank, investors in stocks and diversified portfolios may feel the pinch, but crypto holders often feel sheer panic. The study found that crypto investors were more financially anxious overall, and when facing job loss or financial distress, they experienced significantly more stress than non-crypto investors.

Mr. Trump’s pro-crypto stance may encourage a new wave of retail investors to jump in, believing that political support equates to market stability. This is a dangerous misinterpretation. Government friendliness toward an industry doesn’t change the fundamental risks of that industry.

We’ve seen this cycle before: hype builds, speculation grows, and new investors flood in, convinced they’re getting in early on a financial revolution. And sometimes it’s simply return-chasing behaviour based on hope. Hope is not a strategy.

Crypto has its place, but that place is not as a substitute for traditional emergency savings or a well-diversified, risk-appropriate investment portfolio. If you’re thinking about adding bitcoin, ethereum or other crypto assets to your portfolio, here’s what you need to keep in mind,

1. Don’t mistake political enthusiasm for investment wisdom. Just because an administration is pro-crypto doesn’t mean it’s a safe bet for you. Political support may not make crypto assets less volatile.

2. Keep your emergency savings and investments separate. If you need fast access to cash in a crisis, crypto is one of the worst places to keep it. Market crashes, exchange failures and liquidity issues can leave you stranded when you need funds most.

3. Diversification beats speculation. If you’re investing in crypto, treat it as a speculative asset, not the foundation of your financial plan. A well-diversified portfolio is your best hedge against uncertainty. Pro-crypto financial professionals suggest a 1 per cent allocation to bitcoin is plenty, and that assumes you rebalance regularly. Zero is fine, too: a well-diversified portfolio contains stocks that are directly or indirectly exposed to various crypto-related assets already.

Every time markets feel uncertain, the temptation to bet big on crypto seems to resurface for ideological reasons, not fundamentals. But this new research makes it clear, what feels like financial security today can turn into financial stress tomorrow.

The best investors don’t chase the next big thing, they avoid the biggest mistakes. And treating crypto as a safe haven, that’s a mistake too many investors can’t afford to make.

Preet Banerjee is a consultant to the wealth management industry with a focus on commercial applications of behavioural finance research.