Despite rising more than 40,000% in the past decade, Bitcoin still faces notable risks that investors can’t overlook.
Bitcoin challenges the current monetary system, so there will always be a risk that major governments intervene to prevent the crypto’s adoption.
If Bitcoin fails at successfully scaling up to drive faster and cheaper transactions, it might not reach its full potential.
Not everyone will have the same perspective, but Bitcoin(CRYPTO: BTC) continues to prove that it’s a superior asset. As of this writing in the early afternoon of April 29, the world’s oldest and most valuable cryptocurrency is up 3% in 2025. That might not seem like much, but it’s better than the 6% decline of the S&P 500 index.
Zoom out, and you might have to pick your jaw up from the floor. In the past five- and 10-year periods, Bitcoin has soared 1,000% and 40,210%, respectively. This remains a top-performing asset that is certainly on everyone’s radar after about 16 years of existence.
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But it doesn’t matter how bullish you might be on Bitcoin. This cryptocurrency undoubtedly has its fair share of risks to keep in mind. Here are five you need to know if you plan on buying it in the month of May.
Bitcoin’s biggest risk might be that a country’s government makes it illegal to own and mine. This happened in China in 2021.
There were worries that the same thing would happen in the U.S., especially because Bitcoin is a direct competitor to the current monetary system run by the Federal Reserve. Printing money and having the U.S. dollar be the global reserve currency is a powerful position no one wants to give up.
However, the current White House administration hasn’t shied away from voicing its support for the crypto. Favorable regulations are on tap. And the U.S. just announced plans to create the Strategic Bitcoin Reserve, underscoring how important it is to own this scarce asset.
This doesn’t necessarily mean it is in the clear. The next president could reverse these decisions.
Quantum computers are able to solve complex problems much faster than the machines we have today. If this technology evolves to better functionality, then Bitcoin’s public key cryptography, which keeps the network secure, could be cracked.
If quantum computing ever advances to that level, there could be issues in other areas, too. Perhaps sensitive data for individuals, small businesses, and multinational corporations stored by financial institutions could be compromised. Even top-secret government intel could be exposed.
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Bitcoin has 359 full-time developers working on supporting the network. I have zero doubts that they continue to think about the potential impact quantum computing could have, and are seeking solutions to make Bitcoin even more secure in the future.
Ethereum gets a lot of attention because it is a functional blockchain that allows for the development of decentralized applications. The issue, though, is that its product road map is incredibly complex. While this might seem exciting, there’s a risk that updates introduce software bugs that can cause problems for the blockchain.
Bitcoin stands out because its code is very simple, with some even calling it boring. This is purely by design.
However, upgrades have been implemented in the past, whether to increase the block size or to improve privacy. And if developers choose to present fixes in the future, there could be technical issues.
The Bitcoin network can process just under six transactions per second (TPS). This pales in comparison to the Visa network’s capacity of 65,000 TPS. If the digital coin wants to handle more volume over time, then the problem of scalability needs to be solved.
The Lightning Network is a Layer-2 scaling solution that’s being worked on to address this. But its ultimate success isn’t guaranteed. There’s a possibility that the leading crypto might never be able to scale up for faster and cheaper transactions.
Block CEO Jack Dorsey believes that if Bitcoin doesn’t become used as a method of payment, then it will become irrelevant over time. And to him, this would be a failure.
Bitcoin’s historical performance is truly spectacular, but it has been a very bumpy ride. There have been periods of extreme volatility. In fact, the price has seen multiple drawdowns of greater than 50%.
If volatility doesn’t continue to decrease, then some individual and institutional investors might never be comfortable buying it. This would undoubtedly leave a lot of capital off the table, which could affect the digital asset’s upside potential.
Understanding these five key risks will round out any investor’s knowledge about Bitcoin.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, Ethereum, and Visa. The Motley Fool has a disclosure policy.
5 Must-Know Risks Before You Buy Bitcoin in May was originally published by The Motley Fool
