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Cryptocurrency

Is Crypto a Viable Option in Retirement Accounts?

2024-12-13

These days, the interest in cryptocurrency is on the rise, and it's likely to have a significant impact on retirement planning. Donald Trump's presidential win marked a turning point in cryptocurrency regulation, with the choice of Paul Atkins to lead the SEC signaling a more crypto-friendly framework. Additionally, Trump has floated bold policy ideas like the creation of a "Strategic Bitcoin Reserve" and the exemption of capital gains taxes on cryptocurrency.

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Wall Street's Embrace of Crypto

Wall Street has ramped up its embrace of crypto with Bitcoin and crypto ETFs and other products. Industry giants like Fidelity, Schwab, and BlackRock are leading the charge. The rise of spot Bitcoin ETFs has made it much easier to invest in crypto. In light of these trends, cryptocurrency may become a staple in retirement accounts. While the potential for growth is attractive, investors must weigh the risks with their financial goals.

How to Invest in Crypto in Your Retirement Account

There are two ways to get exposure to crypto in a retirement account. The first is the indirect approach, which involves investing in a publicly traded security like a spot Bitcoin ETF. This is available with traditional IRAs, Roth IRAs and even some 401(k)s. The second is the direct approach, where you purchase cryptocurrencies within your retirement account. This requires working with a platform designed for such investments, like Alto’s CryptoIRA, which supports over 200 cryptocurrencies, including Bitcoin, Cardano and Polygon. Some providers also offer cold storage options for added security. Direct investing requires setting up a self-directed IRA, but not all IRA providers offer this flexibility. Platforms like iTrustCapital, BitcoinIRA, and Coin IRA are in this space. Keep in mind that you cannot fund an IRA with cryptocurrency directly; contributions must be made in cash or rolled over from an existing retirement account. You also need to be careful about the costs. There are setup and recurring account maintenance fees, transaction fees or commissions, and investment expenses. Some crypto IRA firms have been criticized for significant fees, so it's important to know before you buy and read the fine print.

The Benefits of Crypto

Cryptocurrencies are stored on a blockchain, a sophisticated database that records transactions in a decentralized manner. This eliminates the need for third-party verification. Each block of transactions is linked to the previous one through a cryptographic hash, and transactions are validated using consensus mechanisms like proof-of-work or proof-of-stake, maintaining the integrity of the network. Transparency is a key advantage of blockchain technology. All transactions are visible to participants, which has helped build confidence in cryptocurrencies. For example, Bitcoin has a market value of nearly $2 trillion. Cryptocurrencies also offer efficiency and cost advantages for monetary transactions. Being digital, they bypass traditional financial systems, allowing for faster and cheaper transfers, especially for international payments. Beyond transactional uses, cryptocurrencies like Bitcoin have become a popular investment asset. Bitcoin's capped supply of 21 million coins creates scarcity, adding to its value proposition. Diversification is another advantage. Crypto is different from other asset classes and can reduce portfolio volatility and enhance long-term returns by spreading risk across different asset classes.

The Downsides of Crypto

Crypto is still an emerging asset class with a history dating back to 2008. It has been highly volatile, with Bitcoin suffering eight 50% corrections. The crypto market is sensitive to swings in investor sentiment and has relatively low liquidity compared to the S&P 500. Regulatory risk is also a concern. While Trump has signaled support, the regulations are not in place yet and their form is unclear. There are very few 401(k) accounts currently investing in crypto, and federal regulatory gaps remain unaddressed. Crypto has also been susceptible to fraud and scams. In 2023, the FBI received over 69,000 complaints related to cryptocurrency fraud with losses exceeding $5.6 billion. Another issue is the potential disruption of new technologies. Innovations like those powered by AI or quantum computing may make blockchain systems obsolete, devastating the valuations of existing cryptocurrencies. Environmental risk is also a concern. Proof-of-work mining requires massive amounts of computing power and electricity, and each Bitcoin transaction requires about as much water as one backyard swimming pool.

Bottom Line

Given the risks, it's important to be prudent with crypto. Research from BlackRock considers up to 2% of a portfolio invested in Bitcoin as "reasonable." If it went to zero and you were in BlackRock's range for allocation, you likely would not permanently harm your portfolio outcome. The stocks alone may have days where they move the portfolio around by more than 1%. If your stock allocation is all S&P 500, you have more dependency on Nvidia's outcome than with a small allocation to Bitcoin. However, your retirement portfolio may need to last a long time, and 2% might even be too much to speculate on crypto. Before investing in crypto, seek out a financial adviser for guidance.

Before Wyatt Flores closed out his remarkable 2024 with back-to-back nights at Tulsa’s legendary Cain’s Ballroom, he spent a week performing around Music City. These appearances included sold-out shows at Ryman Auditorium and his participation in the Grand Ole Opry's 2024 Nextstage class concert. The Tennessean had the opportunity to witness his performances and engage in a lengthy conversation with this Universal Music Group/Island Records-signed artist.

Unveiling the Journey of a Rising Country Music Star

Performing Around Music City

Wyatt Flores, a 23-year-old native of Stillwater, Oklahoma, embarked on a week-long musical journey around Music City. His performances at Ryman Auditorium, where he appeared as a guest for Georgia-born sister trio The Castellows and opened for Little Big Town, were nothing short of spectacular. These sold-out shows showcased his talent and charm, attracting a diverse audience.During his time at the Grand Ole Opry, he joined nearly a dozen performers, most of whom were under the age of 30. This multi-generational gathering of talented artists demonstrated the vibrant music scene in Nashville. The Tennessean witnessed his performances at all three venues and was deeply impressed by his artistry.

At the Ryman Auditorium: A Night of Sound and Fury

When flanked by Bo Staloch, Evan Honer, and The Castellows at the Ryman, it became evident that America's youth are engaged in a dedicated process of creating music. Flores took the stage on Saturday night and shared his thoughts. He said, "I don't like to pat myself on the back too much; instead, I like to say that I've (spent the last year) breathing a sigh of relief because my work can stand on its own while I'm enjoying the present and getting excited about the future. My career has taught me to have so much pride in my life (to date and also) where it's headed."The stage at the country music's Mother Church has evolved into a place of inspiration. A year ago, Flores opened for Charles Wesley Godwin, and their performances elicited powerful responses. This year, his own work represented a pinnacle, and both goals felt okay. Whether it was Staloch's confident crooning or Honer's energetic opening, the songs all arrived as patiently told stories.The beauty of Flores' awkward-to-fearless proclamation during his "Half-Life" EP track "I Believe In God" was emblematic of a generation of post-teen singer-songwriters. They are empowered by a confusing life crossroads and must decide whether to hold onto their music or set it free.

Americana and Roots Music's Youth-Driven Surge

A multi-generational, Americana-to-rootsy, soulful classic rock synergy is brewing in Nashville. Streaming platforms and word-of-mouth influence have given rise to a new wave of artists. Over 150 million songs have been uploaded to Spotify since COVID-19's quarantine, and there are dozens of artists under 25 currently working in Nashville who will release groundbreaking albums in the next 12 months.This era is characterized by a commercial and musical maturity that values knowing better and doing better. Acts like Kaitlin Butts, Brent Cobb, Charley Crockett, Charles Wesley Godwin, Jason Isbell and the 400 Unit, and Turnpike Troubadours have fostered a new generation of artists inspired by Chris Stapleton and Tyler Childers.

"Welcome To The Plains" and the Red Dirt Flair

Flores' "Welcome To The Plains" album, released in October 2024, showcases his ability to blend harmonies and melodies. Songs like "Life Lessons" reveal hints of Alabama's "Mountain Music" style, while "Losing Sleep" has a bluesy bass groove. "When I Die" also bears the undertones of Kenny Rogers' era.During his live sets, he cracks a beer onstage and jokes about his show being a place where everyone is welcome. His performance of "Wish I Could Stay" and "West of Tulsa" showcases his mastery of the red dirt sound, a blend of country, blues, and psychedelic rock.

Personal Growth and Creative Acclaim

Personal growth has been key to sustaining Flores' art. Ten months ago, he took time off from the road due to a feeling of numbness. He realized the importance of taking care of himself and constantly striving to be a better person. His fans have played a crucial role in helping him through tough times.When asked about his mental and physical health, he said, "I'm a perfectionist who has spent the past year failing and getting better at caring for myself. Constantly trying to be a better person for my band, family and fans has allowed for the best person I've ever been (to emerge)."

Achieving His Dreams

Wyatt Flores' journey has been a wild ride. He used to feel alone, but now his songs have connected with people, and he no longer feels that way. In 2025, he will tour worldwide for three weeks, putting out "relatable" music that allows him and his fanbase to "be there for each other."He started as a kid wanting to play red dirt country in a red dirt band, never thinking he would have success beyond the Oklahoma state line. Now, he has a diverse worldwide fanbase that respects his hard work. He realizes that his dreams came to life in a town filled with dreamers.

In a musical landscape where the term "old soul" is often misused, Stella Prince emerges as a true 20-year-old folk sensation. Hailing from Nashville, her musical inspiration stems from the holy trinity of singers - Karen Carpenter, Patsy Cline, and Judy Garland. These three voices have shaped her impressive vocals and equally inspiring songwriting, which is folk-inspired by the queen of folk, Joni Mitchell.

Stella Prince: Carrying the Torch of Folk Music into Gen Z

The Trio that Shapes Stella Prince

Karen Carpenter's voice holds a special place in Stella Prince's heart. As she recalls, "The power of 'Yesterday Once More' makes me sob every time I hear it. She is my personal favorite singer ever. I've been obsessed with her since I was eight years old and I've cried many tears about her. I have photos of her on my walls and carry her memoirs with me wherever I go." Patsy Cline and Judy Garland complete the trio, each leaving an indelible mark on her musical journey.Just like in the '60s folk scene where artists played coffeehouses and clubs every night, Stella Prince has turned a tireless work ethic into burgeoning music success. In 2024 alone, she played 300 shows, all booked by herself. Thanks to these shows, she now has a team in place to help with her mission of bringing folk music to Gen Z.

Stella Prince's Red Carpet Experience

Last weekend, Stella Prince attended the Variety Hit Makers brunch in LA. It was her first ever red carpet, a surreal experience that she describes as "like my world went from black and white to color." Meeting other amazing artists like Lainey Wilson, Benson Boone, Laufey, Dasha, and Lauren Spencer Smith was a highlight. Benson Boone's advice, "My first ever red carpet, I was such a mess, completely freaked out. And then after a few more, I was like, 'Oh, this is fun.'" gave her the confidence to enjoy the moment. After the event, she wrote down 30 pages in her diary to remember it forever.

The Call to Folk Music

Stella Prince's love for music started at a young age. From the age of two or three, she was building towards this moment. After going through COVID and experiencing massive loneliness and isolation, she feels that now is the right time for folk music to be mainstream again. Her music, which she calls Gen Z folk, is specifically written for her generation. It reflects the hardships and emotions of being a young adult in today's world.

Her Path to Success

The past seven years have been a slow build for Stella Prince. She started playing in restaurants, bars, wineries, and breweries. In the beginning, it was hard as no one would listen, but as she grew, people started to pay attention. Now, they not only listen but also mouth the words to her songs. Two of her songs, "Two Faced" and "Crying on a Saturday Night," have a special connection with people. They often share their personal interpretations of the songs with her.

Contemporary Folk Inspirations

Stella Prince looks up to contemporary artists like Kasey Musgraves, Noah Kahn, Laufey, and Lana Del Rey. But for her, Joni Mitchell is the queen of folk. She is amazed to see how Joni Mitchell has become a Gen Z icon. Every time she meets someone her age, they mention loving Joni Mitchell.When it comes to touring in 2025, Stella Prince dreams of touring with Joan Baez. The fact that all these folk singers are still performing and active is truly inspiring.In conclusion, Stella Prince is proudly carrying the torch of folk music into Gen Z, bringing a fresh perspective and a personal touch to the genre.