Bitcoin IRA Statistics

In Retirement Living’s cross-generational survey of over 1,000 Americans conducted in May 2023, cryptocurrencies were the most common alternative investment that survey respondents had made in the previous six months, and individual retirement accounts (IRAs) were the third-most common traditional investment. 

Investors who appreciate the tax advantages of IRAs and the high growth potential of crypto may be particularly drawn to Bitcoin IRAs, a relatively new type of retirement account available since 2016. But Bitcoin IRAs are best approached with caution, particularly by those who are nearing retirement and concerned with financial stability.

Key Takeaways:

• Bitcoin IRAs are self-directed IRAs (SDIRAs) that can hold cryptocurrencies. These SDIRAs may take the form of either traditional or Roth IRAs, giving their owners tax advantages.
• Although the term “Bitcoin IRA” is commonly used, these accounts can typically hold a variety of cryptocurrencies, not just Bitcoin. They may also allow other alternative investments, like precious metals and real estate.
• SDIRAs are subject to the same contribution limits as other IRAs. For the 2024 tax year, individuals under the age of 50 can contribute up to $7,000 to their SDIRAs, while those ages 50 and older can contribute up to $8,000.
• Cryptocurrencies are prone to dramatic value fluctuations, which may make them particularly risky investments for those who are approaching retirement.
• A typical IRA owner is 56 years of age or older, wary of financial risk and may be of either gender. A typical cryptocurrency owner is a man under the age of 50 who is comfortable taking financial risks.

Bitcoin IRA Statistics

As a relatively new means of saving for retirement, very little research has been conducted on cryptocurrency IRAs. But separate examinations of IRA and cryptocurrency trends shed some light on which investors may be most interested in these accounts.

IRA Statistics

A study conducted by the Investment Company Institute in mid-2022 revealed that more than 4 out of 10 U.S. households own an IRA. That study, along with a separate study conducted by the Transamerica Center for Retirement Studies, revealed the following about IRA account owners:

• IRAs are more popular with seniors than with any other age group, and 52% of households headed by someone aged 65 or older invest in an IRA.
• Per IRS data from the 2020 tax year, about 51% of IRA owners are female and 49% are male.
• An estimated 50% of Americans who identify as Asian or Pacific Islander own IRAs, the highest percentage of any surveyed racial group. Black Americans and those identifying as African American had the lowest IRA ownership rate of any racial group surveyed, at only 32%.
• Higher-income Americans are more likely to own an IRA than lower-income Americans. Fifty-four percent of households with an annual income of $50,000 or more own an IRA, whereas only 21% of households with an annual income of less than $50,000 own an IRA.
• Only 36% of IRA-owning households are willing to take above-average or substantial risk with their financial investments.
• The median amount of money invested in an IRA is $100,000, which is enough to purchase 2.2 bitcoin as of Feb. 8, 2024.

Cryptocurrency Statistics

The share of American citizens who have invested in or used cryptocurrency increased from only 5% in 2019 to an estimated 16% in 2023. While this indicates a growing interest among U.S. investors, Americans have had a more tepid response to cryptocurrency overall than investors in a wide range of other countries. This includes less wealthy countries that have experienced hyperinflation, like Turkey, as well as countries that have stable currencies and a higher gross domestic product per capita than the U.S., like Switzerland.

Cryptocurrency adoption in the U.S. is demographically skewed. Some of these adoption disparities, like age gaps, may be reduced as time passes and decentralized finance becomes less novel. Other disparities, like gender gaps, may prove more stubborn.

• In a March 2023 study conducted by the Pew Research Center, 75% of the Americans surveyed who were familiar with cryptocurrencies felt that they weren’t safe investments. This skepticism increased with age. Among survey respondents who were ages 50 and older who had heard of cryptocurrency, 85% felt that it’s not safe to invest in or use.
• Around 24% of Asian Americans own cryptocurrency, compared with only 14% of white Americans.
• Women generally have a greater aversion to financial loss than men. This may explain why a quarter of American men have invested in or used cryptocurrency compared with only 10% of women.
• A 45% plurality of cryptocurrency investors reported that their investments performed below their expectations, while just 15% indicated that their cryptocurrency investments outperformed expectations.

Asset Values Compared Over Time 

The charts below show sample historical prices for two popular cryptocurrencies, a domestic stock, a foreign stock, an exchange-traded fund (ETF) and a precious metal.

The two cryptocurrencies exhibit the most dramatic value fluctuations among these sample assets, with Ethereum, for example, appreciating by over 10,300% from 2017 to 2018 and then decreasing by more than 90% the following year. While young investors may be able to weather these wild swings, they can be financially catastrophic for those nearing retirement who put too many eggs in one crypto basket.

The unpredictability of cryptocurrencies was underscored in a 2021 survey conducted by BitcoinIRA, in which about 1 in 3 survey respondents expected Bitcoin's price to jump above $100,000 by the end of 2022. But this did not eventuate. Rather, Bitcoin’s value ended up dropping from $47,628.20 on the date that the survey results were released (Dec. 16, 2021) to $16,537.40 on Dec. 31, 2022.

Bitcoin IRA Advantages

While the high-risk nature of cryptocurrencies may seem incompatible with prudent retirement planning, a judicious approach to crypto investing within an IRA offers several potential benefits.

Freedom

Issuers of other IRA types require investors to choose from the stocks, mutual funds, bonds and other mainstream assets approved by the IRA’s issuing firm. SDIRA investors can choose to hold a much wider range of assets in their IRAs, which may better reflect their interests than mainstream investments.

Diversification

Investors can mitigate their risk of loss by building a portfolio made up of many different asset classes across numerous industries. A measured inclusion of various cryptocurrencies into an investment portfolio can add diversification benefits.

Potential for High Returns

Though investing in cryptocurrency is always highly speculative, some cryptocurrencies have dramatically increased in value over the years.

Tax Advantages

SDIRAs have the same tax advantages as standard IRAs. Traditional IRA contributions may be tax deductible, and amounts held in a traditional IRA are only taxed when distributed (withdrawn). Though Roth IRA contributions cannot be deducted, qualified distributions are untaxed.

Additional Assets

Because it’s a SDIRA, a cryptocurrency IRA may allow you to invest in other alternative assets, like precious metals, in addition to cryptocurrency. 

Bitcoin IRA Disadvantages

While all investments should be informed by extensive research, the particularly volatile nature of cryptocurrencies and the highly independent nature of SDIRAs mean that any interested investor should likely proceed with heightened caution. 

Lack of Oversight

Investors who open SDIRAs are solely responsible for evaluating and choosing the assets held in their SDIRAs, with no input and minimal oversight from the SDIRA’s custodian. To ensure proper due diligence, it’s a good idea to work with a financial adviser when choosing to invest in cryptocurrencies, which adds another expense to the investment process.

Lack of Transparency

Cryptocurrencies are typically not accompanied by the same financial disclosures and information provided for publicly traded securities. And even if a cryptocurrency does come with some kind of disclosure, it won’t necessarily be audited by a public accounting firm or checked by a SDIRA’s custodian.

Volatility

Unlike more stable alternative investments, like gold, cryptocurrencies’ values can fluctuate wildly. This may make them ill-suited to those who plan to retire soon and/or have a low risk tolerance.

Fees

Cryptocurrency IRAs may charge initial setup fees, storage fees, transaction fees and annual, quarterly or monthly maintenance fees, among others.

Dubious Marketing

Studies suggest that celebrity endorsements are disproportionately influential when applied to products that are unfamiliar to consumers and that they can cause consumers to make hasty purchases. Cryptocurrencies are rife with celebrity endorsements, which is particularly concerning given that many cryptocurrencies are unproven and highly volatile assets.

Top 3 Bitcoin IRA Companies

The risky nature of incorporating cryptocurrency into a retirement strategy necessitates a high degree of selectivity when choosing where to open a crypto IRA.

When choosing your crypto IRA platform, give some thought to whether you’ll comfortably meet the platform’s minimum investment requirement, if it offers enough cryptocurrencies for you to diversify your investments and if its fee structure is justified by its security record and user experience. The three cryptocurrency IRA providers listed below balance those considerations and address the interests of both new and veteran crypto investors. 

BitcoinIRA

• Number of available cryptocurrencies: 56
• Other assets available: Gold
• Account minimum: $3,000
• Fees: 2% per trade; 1.99% setup/deposit fee; 0.08% monthly fee; $300 account closure fee; etc. 

Founded in 2016, BitcoinIRA claims to be the first and largest crypto retirement platform, with over 170,000 users. Aside from its relatively early founding date, the platform’s popularity may be partially explained by its strong user experience and educationally-minded approach. Crypto trades can be easily executed on the go via BitcoinIRA’s iOS and Android apps, which have ratings of 4.5 out of 5 stars in the App Store and on Google Play. Its Crypto Knowledge Center features dozens of guides to different cryptocurrencies and articles about broader crypto topics, like crypto taxation.

BitcoinIRA account owners’ assets are insured up to $700 million and stored in segregated cold storage accounts with BitGo Trust, which processes 20% of all global Bitcoin transactions.

But although BitcoinIRA’s years of experience and security measures are impressive, its fee structure makes it more expensive than some competitors. What’s more, those fees aren’t transparently disclosed on BitcoinIRA’s site: They can only be obtained by contacting a BitcoinIRA service representative. 

For more information, read our BitcoinIRA review.

iTrustCapital

• Number of available cryptocurrencies: 33
• Other assets supported: Gold and silver
• Account minimum: $1,000
• Fees: 1% per trade; $75 one-time fee to convert a traditional or SEP IRA to a Roth IRA 

Many cryptocurrency IRAs either charge exorbitant fees that can significantly erode an asset’s return on investment or are less transparent than they should be about their fee structure. But iTrustCapital’s fees are simple, transparent and low. There are no setup fees or ongoing maintenance fees.

The software platform allows investors to open new IRAs, transfer existing IRAs or roll over other retirement accounts, like 401(k)s. Trades can be executed 24/7, and the Conditional Transaction feature allows for automated sales or purchases when an asset reaches a specific price. 

iTrustCapital uses Fortress Trust — a regulated, state-chartered trust company — as a third-party Qualified Custodian for its clients’ assets. A SDIRA can be set up within three business days of an application’s submission. 
For more information, read our iTrustCapital review.

Alto CryptoIRA

• Number of available cryptocurrencies: 200+
• Other assets available: None
• Account minimum: $10
• Fees: 1% per trade; $50 for account closure; $25 for outbound wires

Alto’s integration with Coinbase, the biggest publicly traded crypto exchange in the U.S., gives it a much larger cryptocurrency selection than most of its competitors. Its fee structure is refreshingly transparent, and a really low account minimum makes it a good option for those who are just starting to experiment with cryptocurrency.

Both accredited and non-accredited investors interested in other alternative investments, like private equity or real estate, can open separate SDIRAs with Alto as well. But Alto does not permit these assets to cohabitate with crypto in the same IRA “out of an abundance of tax caution.” A separate fee structure, including a monthly fee, applies to these non-crypto SDIRAs.

Alto’s regular SDIRAs are available to residents of any U.S. state, but its CryptoIRA is currently not available to residents of Hawaii.

You can get more details about these cryptocurrency IRA companies by reading our full article covering the best Bitcoin and cryptocurrency IRAs.

FAQ

What is a self-directed IRA?

Like a standard IRA, a self-directed IRA is a tax-advantaged retirement account. But unlike standard IRAs, which hold publicly traded securities like stocks and mutual funds, self-directed IRAs can hold alternative investments, such as cryptocurrencies and real estate. The owner of a self-directed IRA is solely responsible for conducting due diligence for their investments and instructing the IRA’s custodian to fund the assets they’ve chosen.

How does a self-directed IRA work?

To set up a self-directed IRA, start by reading impartial reviews of different companies that offer these accounts. Providers of these accounts are typically specialist financial institutions rather than large banks or brokerages, which are more likely to offer standard IRAs. After choosing which company to work with, you can pay whatever setup fees are required and then begin to purchase assets you’d like held in the account.

To invest within your self-directed IRA, you’ll fill out a form that authorizes your IRA’s custodian to purchase the asset you chose, along with any other specialized documents that the purchase of that asset necessitates. The custodian will then execute the transaction for you.

What is the 2024 IRA contribution limit? 

The IRA contribution limits for 2024 are $7,000 for individuals under the age of 50 and $8,000 for individuals ages 50 and older. These have increased from the 2023 contribution limits, which were $6,500 and $7,500 for those age groups, respectively.

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