Crypto investing has emerged as a significant alternative to traditional investment in the 2020s. This article will review what crypto investing means in practice, why and how to invest in crypto, and what risks investors should be aware of. The goal is to provide a realistic and comprehensive picture of how crypto investing differs from other investments and who it may be suitable for.
Table of Contents
What is crypto investing?
Crypto investing means investing in digital assets. The term “cryptocurrency” is widely used, but people are increasingly referring to “cryptos”, as it better captures the broader category of digital assets.
Investing in crypto is similar to investing in stocks, but the market structure, risk levels, and price movements differ from those of many traditional assets. Crypto trading takes place on digital trading platforms.
Crypto investors use general investment principles and technical analysis to select investment targets. Many invest in cryptos using the buy-and-hold principle familiar from stocks, with a long time horizon. Monthly savings and DCA are also popular among small investors.
The exceptional volatility of cryptos has attracted many day traders and other short-term speculators. The use of leverage is also common among traders, further increasing market risk.
Cryptos have become a globally significant investment class in the 2020s. In recent years, crypto investing has expanded beyond direct crypto holdings to ETFs, derivatives, and shares of publicly listed companies operating in the crypto industry.
Hundreds of millions of people invest in crypto these days.
Why invest in cryptos?
Investing in cryptos has become more common in recent years. There is also a broader digitalization of society behind it. It is no coincidence that cryptocurrencies are popular among digital natives aged 18–30, who are accustomed to using digital assets, transacting online, and relying on mobile devices.
Below are five reasons why people are considering cryptos as part of their portfolios:
- 🧩 New asset class
- 📈 High growth potential
- 📊 Historical returns
- 🌐 Global 24/7 market
- ⚖️ Positive regulatory developments
For many, the most important reason is the opportunity to invest in a completely new asset class. Cryptos lack established tools for measuring valuation levels or predicting market cycles. This can give ordinary retail investors an advantage over professional investors that is not available in the stock market.
In addition, the ability to independently manage funds outside the banking system is an important reason for many.
Cryptos are also part of the broader digitalization of society, which began with the development of the PC, the Internet, mobile devices, and social media. According to many estimates, cryptos, along with artificial intelligence, are the most important ongoing megatrends and are still in their early stages of development.
Crypto returns have been exceptional when compared to traditional asset classes. Although Bitcoin’s market capitalization reached over $1 trillion in the 2020s, its price still rose by more than 100% in 2023 and 2024. Below is a table of Bitcoin’s annual returns on the Bitstamp exchange.
| Year | USD price change |
|---|---|
| 📈 2016 | +124 % |
| 📈 2017 | +1336 % |
| 📉 2018 | -73 % |
| 📈 2019 | +94 % |
| 📈 2020 | +304 % |
| 📈 2021 | +59 % |
| 📉 2022 | -64 % |
| 📈 2023 | +156 % |
| 📈 2024 | +121 % |
| 📉 2025 | -6 % |
The price movements of cryptos with a smaller market cap can be even stronger, but at the same time, their risk is clearly higher. Also, keep in mind that historical returns are no guarantee of future performance.
The crypto market is one of the few markets that is open 24/7, every day of the year. This provides more opportunities, particularly for day traders, than the stock market. However, continuous trading can also increase impulsive decision-making.
The crypto market has been called the “Wild West” due to the lack of global regulation. However, the situation has improved significantly in recent years. Global money laundering regulations have become stricter, crypto exchanges’ KYC processes have tightened, and new EU-level crypto legislation has been introduced.
Different ways to invest in crypto
Investing in crypto has changed significantly in recent years. More and more crypto investors want to benefit from the industry’s growth and crypto price movements without owning real cryptocurrencies. Let’s go through four popular ways to invest in crypto.
Real crypto
Buying real crypto is still a very popular way to invest. When you buy real cryptos, you can also transfer them to a non-custodial crypto wallet and manage your holdings independently. You can also trade real crypto 24/7 when stock markets are closed.
The downside of this option is the security risks of managing your wallet, including malware and online scams, which can result in losses.
ETNs and trackers
A Finnish crypto investor can purchase tracker products and ETN funds that follow crypto prices, like those available from Nordnet. The price of such an instrument follows the price development of its underlying asset. There are currently various ETN and tracker products available for the most popular cryptocurrencies.
The advantage of such instruments is the ease of use for investors: you can manage them from the same platform where you also invest in stocks and funds. The disadvantage is issuer risk; in addition, you can only trade these products during the stock market’s opening hours.
Treasury companies
Strategy, founded by Michael Saylor, has become the world’s most well-known Bitcoin treasury company. Strategy has over 700,000 bitcoins on its balance sheet. There are also dozens of similar companies in the market, some of which have acquired other cryptocurrencies on their balance sheets.
By investing in a treasury company, you can gain exposure to a certain cryptocurrency through a single stock. In a bull market, the company’s share price can also move more strongly than the price of the cryptocurrency it owns. The downside is the risk of bankruptcy and the possibility of trading only during the stock market opening hours.
Other crypto stocks
In addition to treasury companies, dozens of other crypto-related companies are already listed on stock exchanges. These include trading platforms Coinbase and eToro, as well as various Bitcoin mining companies. Their prices often reflect broader trends in the crypto market.
A company operating in the crypto industry can offer stronger price performance in bull markets, but at the same time, is exposed to company-specific risks. You can also only trade during stock market opening hours.
Risks associated with crypto investing
Investing in cryptocurrencies carries risks that are distinct from those associated with traditional investments, such as stocks. Some risks are related to technology, and others to crypto market behavior. Let’s go through the most important risks that crypto investors should be aware of.
Technology-related risks
Cryptocurrencies involve technological risks that are not familiar to other investment classes. Two key technological risks concern transactions and wallets.
Crypto transactions are essentially irreversible. If you send your crypto to the wrong address, you will lose your funds. Crypto addresses are long and complex strings that can be copied incorrectly.
Crypto wallets offer the opportunity to manage your funds independently, but their use also involves security risks. If you are careless about storing your wallet recovery passwords, you can lose the entire contents of your wallet. You can learn more about crypto wallets and their safe use in our separate guide.
Market-related risks
Crypto prices are known for their high volatility compared to traditional asset classes. Even the largest cryptocurrency, Bitcoin, regularly experiences price movements of tens of percent, both up and down. Cryptocurrencies with smaller market capitalizations can lose up to 95 percent of their value in bear markets.
Strong price changes can lead novice investors to make highly emotional decisions, such as panic-selling during bear markets. Volatility also makes trading and using leverage very risky.
Risks related to crypto projects
Individual crypto projects also present multiple risks when viewed as investment targets. One of the most important risks is the lack of generally accepted models and tools. It is difficult for an investor to reliably assess whether a crypto project is a good long-term investment or whether its price is relatively high or low.
Many crypto projects remain in early development, which heightens uncertainty about their future success. It can also be difficult for an investor to keep track of, for example, the development of competing crypto projects, given how quickly the market and technology are evolving.
Scams
Unfortunately, there are numerous scams associated with cryptocurrencies. Scammers try to contact potential victims by email, phone, WhatsApp, and social media.
Novice investors are particularly vulnerable to scammers. People who have not yet made any crypto investment are often targeted as victims. Crypto scams and how to identify them are described in more detail in our separate guide.
Regulatory risk
Regulation of cryptocurrencies has evolved significantly in recent years. In the EU, the crypto market is governed by MiCA and related regulations. Finnish operators are also subject to the regulation of the Financial Supervisory Authority. However, cryptos are a global investment class.
Many people invest in cryptocurrencies on global exchanges, whose regulatory environments can be difficult for investors to understand. There is also uncertainty surrounding the use of decentralized DeFi applications, as they are not yet covered by the global regulatory framework.
How does investing in crypto work in practice?
There are mainly two ways to invest in crypto:
- You can buy real cryptocurrencies from a crypto exchange
- You can buy crypto stocks or other derivatives through a stockbroker
Buying crypto on an exchange is now quite easy, even for novice investors. Finnish investors often prefer domestic trading platforms where transactions can be done in Finnish. You can read about how to purchase crypto step by step in a separate crypto buying guide.
Many investors initially store cryptocurrencies on a trading platform before switching to their own wallet. Using a crypto wallet is not mandatory, although it is certainly recommended in the long term. You can switch to using a wallet later as you gain experience.
Crypto-related tracker products, ETFs, ETNs, and shares can be acquired through a stockbroker. Nordnet is Finland’s most popular stockbroker and offers dozens of crypto investment instruments. Check out our article on Buying Crypto on Nordnet for more information.
No matter how you invest in crypto, it’s a good idea to remember the risks involved. Many investors initially allocate a small portion of their portfolios to crypto to minimize risk.
Once you’ve gone through your first major bear market, you’ll have a better idea of your risk tolerance. You can then consider increasing your holdings.
Crypto taxation
Taxation is an essential part of crypto investing, and it is worth considering even before your first trades. In many countries, crypto taxation follows a similar principle to stock taxation, meaning you pay tax on the difference between the sale and purchase price of crypto. This is how taxation works in Finland as well.
Income from the sale of cryptocurrencies is capital income. Currently (2026), the tax rate in Finland is 30 percent up to 30,000 euros and 34 percent on the excess.
Cryptocurrency taxation has so far created significant work for crypto investors and has been a clear weakness compared to shares. If you buy shares from Nordnet, for example, the information about your trades is automatically sent to the tax authorities. You only need to check their accuracy. In the case of crypto, every investor must do their own accounting and report the information to the tax authorities.
However, the situation is improving. Starting in 2026, the tax authorities will automatically receive information from domestic crypto trading platforms and many foreign exchanges. However, this does not relieve the investor of their own accounting responsibilities, as the tax authorities may not have information on all transactions or events from previous years.
Many investors use separate crypto tax software to track transactions and facilitate reporting. You can upload information about your trades to them, after which the program will automatically calculate taxes. The following crypto tax software is commonly used:
Remember that crypto tax regulations can change every year. Always check the Tax Administration’s website for up-to-date information.
Summary
Investing in cryptos has emerged as a significant alternative to traditional investments. Globally, it is already a multi-trillion-dollar asset class that hundreds of millions of people invest in.
Crypto investing offers new opportunities but also carries significant risks. High volatility, the technological characteristics of cryptos, project-specific uncertainties, online scams, and regulatory changes make crypto investing challenging – especially for beginners.
In practice, investing in crypto is typically done either through crypto trading platforms or through derivatives offered by traditional stock brokers. The choice depends on the investor’s goals, experience, and risk tolerance.