Why isn’t crypto treated as a core retirement asset?

How crypto prices have behaved

Crypto prices have moved far more than share prices, in both directions. The FCA says crypto prices can move suddenly with no warning, on the back of social media posts or announcements on crypto policy.

Research by an economist at CME Group, a US exchange operator, measured Bitcoin’s typical daily move from January 2014 to April 2025. A daily standard deviation is the size of an ordinary day’s rise or fall. For Bitcoin it was 4.27%, against 1.12% for a broad index of large US company shares.

That is commentary rather than an official figure. The same research recorded the largest falls in four stressed periods, each measured from peak to trough.

A worked example from the FCA

The FCA gives its own illustration. Bitcoin peaked at £51,032.02 in November 2021. At the end of December 2023 it stood at £35,116.86. The arithmetic runs as follows.

• Value kept: £35,116.86 ÷ £51,032.02 = 0.6881.
• Fall: 1 − 0.6881 = 0.3119, or 31.19%.
• Money put in at the peak: £300 × £35,116.86 ÷ £51,032.02 = £206.44.

Falls have also come from outside the price. In November 2022 one of the world’s largest crypto exchanges collapsed within days. The FCA reports that over one million customers were left unable to withdraw their assets.

For someone drawing an income, the timing of a fall matters as much as its size. A holding sold during a fall turns a paper loss into a real one. So for retirement income, how deep and how sudden an asset’s past falls have been carries extra weight.

Hedge or not: does crypto move with shares?

The evidence says crypto has not reliably moved against shares, and since 2020 it has more often moved with them. A hedge is an asset expected to hold up, or rise, when another falls.

A correlation measures how closely two prices move together. It runs from −1, always opposite, through 0, no link, to +1, always together.

The rows come from two studies with different methods and overlapping periods. They are not one continuous series, and each is a historical estimate rather than a fixed property of Bitcoin.

The research finds three things about the link.

• The link changed rather than settled. Before 2020 there was almost none. Since then it has been positive, but it has moved within a wide band. Measured over rolling 60-day windows, it ranged between 0.0 and 0.6.
• The link tended to tighten when markets were under stress. The IMF found that spillovers between crypto and share markets rose in volatile episodes, such as the market turmoil of March 2020. Those are the moments when a hedge is meant to help.
• The IMF found Bitcoin’s link with shares had become higher than the link between shares and gold, investment grade bonds or major currencies. It concluded this limits the diversification once claimed for crypto.

A Federal Reserve Bank of Chicago working paper, published in August 2026, looked at Bitcoin from April 2013 to March 2026. It found Bitcoin’s sensitivity to the broad US share market rose from close to zero before a break in December 2020 to above one afterwards.

A sensitivity above one means Bitcoin tended to move by more than the market did. The authors also found no measurable link to US government bond returns. They say the views are their own, not the Federal Reserve’s.

None of this shows crypto will always move with shares. It shows that the hedging role many people describe has not held consistently in the data so far.

Why the evidence is still thin

Crypto’s price record covers a little over a decade, while the record for shares covers centuries. Retirement planning leans on long records because a retirement can last decades and pass through many kinds of market.

The two are different datasets, built in different ways for different markets. Record length alone does not show that an asset is unsuitable. It limits how much the past can say about the future.

A short record limits what can be known in four ways.

• Few full cycles. A record of about 13 years holds only a handful of booms and busts. Patterns drawn from so few episodes can break when conditions change.
• Untested conditions. Crypto has not been through a long period of high inflation in a mature market, or a decades-long bear market. How it would behave there is not known.
• A market that keeps changing. The Chicago Fed paper links shifts in Bitcoin’s behaviour to new futures markets, exchange traded products and company holdings. Each change makes the earlier record a weaker guide to the next one.
• No cash flow to anchor a value. Shares pay dividends and bonds pay interest, which gives analysts a way to estimate what they are worth. The Chicago Fed authors note Bitcoin’s value is not derived from a stream of cash flows. The FCA says the price of many cryptos is driven mainly by whether other people are buying.

The CME Group author draws the same conclusion from a market view. Whether the recent link with shares lasts is uncertain, since crypto is still early in its life.

UK protections and rules

Most crypto activity in the UK is not yet regulated as an investment, and direct holdings are mostly outside the compensation and complaints schemes that cover mainstream investments. These rules apply UK-wide, including in Northern Ireland, and are as they stand in 2026/27. Each one is in force unless it says otherwise.

A crypto exchange traded note is a debt security that tracks the price of a cryptoasset and trades on a stock exchange. Because it is a debt, its value also depends on the issuer being able to pay.

• Direct crypto is mostly unregulated. The FCA says most crypto-related activities are not regulated in the UK as yet. Crypto firms register with the FCA for anti-money laundering rules, and crypto marketing is regulated.
• Compensation and complaints. The FCA says buyers are unlikely to have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service if something goes wrong.
• A wider regime is on its way. Regulations made on 4 February 2026 bring crypto trading platforms, dealing, custody and staking under FCA authorisation, in full from 25 October 2027. They are law but not yet in force.
• Crypto exchange traded notes. Retail investors have been able to buy them since 8 October 2025, if they trade on a UK recognised investment exchange. The FCA says they have no Financial Services Compensation Scheme cover.
• Crypto derivatives. The FCA’s ban on selling crypto derivatives to retail investors remains.
• Notes in pensions. HMRC says registered pension schemes have been allowed to hold the notes since 8 October 2025.
• Notes in ISAs. Since 6 April 2026 the notes qualify for the Innovative Finance ISA, and no new purchase or switch into a stocks and shares ISA is allowed. Notes held in a stocks and shares ISA immediately before that date stay qualifying for as long as they remain in that account.
• Paying pension contributions in crypto. HMRC does not treat crypto as money, so crypto cannot be used to pay a tax-relievable contribution to a registered pension scheme.

The government has said it will keep the notes in tax-advantaged accounts under review, with a view to allowing them in stocks and shares ISAs later. No date has been announced.

The FCA said lifting the ban lets people judge whether such a high-risk investment is right for them, given they could lose all their money.

What this guide does not do

This guide explains why crypto is treated as a high-risk holding rather than a core retirement asset. It does not say whether anyone holds crypto, or how much. That turns on a person’s own age, income, other savings, plans and appetite for loss.

This guide informs. It does not advise anyone to buy, sell or hold crypto, shares, bonds or any other asset or product it mentions. Whether any of it suits a particular person turns on their own circumstances. MoneyHelper gives free, impartial guidance, and a regulated financial adviser, whose status can be checked on the FCA Register, can advise on your own case.

How Landfall handles it

Each holding also has a correlation to equities, which is how closely it moves with them in the stress test. In a crash it follows equities by that correlation, or by the floor set on the Stress test page if that is larger. How far it falls then depends on its volatility, so a steady holding falls less than equities and a more volatile one falls further. A pot not split into holdings takes the crash’s returns exactly.