After scandals and bankruptcies, things had gone quieter around cryptocurrencies for a while. The next wave of euphoria then pushed the Bitcoin price above US$100,000 at times. But with Bitcoin and other „cryptos“, phases of euphoria and disappointment often follow one another in quick succession.
A technology that leads some to dream of overhauling the entire financial system. Add to that adventurous tales of rapid riches, but also of price crashes and crime. Bitcoin and the many other cryptocurrencies stir emotions and divide opinion.
In mid-January 2023, one Bitcoin was worth around US$21,000. In mid-January 2025, the price rose above US$100,000 for the first time. Steep climbs like these naturally make people sit up and take notice. A strong boost came at the start of 2024, when the US Securities and Exchange Commission (SEC) approved exchange-traded Bitcoin ETFs for the first time. Over the course of the year, Donald Trump provided further momentum during his election campaign. His idea of a national Bitcoin reserve in particular fuelled visions of growth.
Bitcoin in reserve
A national reserve can be held for many things. For oil and gas, for example, or for food. Canada holds a strategic reserve of maple syrup. The country is the world's largest producer of this syrup. The reserve is designed to cushion swings in production and prices.
In many countries, it is common practice for Bitcoin seized by judicial authorities to be sold off. This happens more often than you might think. And it is then a potential trigger for price setbacks.
In early March, Trump reaffirmed his plans for a crypto reserve. According to these plans, other cryptocurrencies besides Bitcoin should also be part of it, for example Ether. Exactly how such a reserve is to be built, however, is not yet clear. One option would be to limit it to seized crypto holdings, or to actively expand beyond those. Whether the Fed would be involved in any way is unresolved. So far, the US central bank is not legally permitted to buy cryptocurrencies such as Bitcoin.
The topic of a Bitcoin reserve is being explored elsewhere too, at the Czech central bank for example. For now, it is only a matter of sounding out and examining the possibilities. However, ECB President Christine Lagarde has already spoken out against EU member states holding currency reserves in Bitcoin.
A cryptic world
„Blockchain“, „Bitcoin mining“, „meme coins“ and „dead coins“: anyone dealing with cryptocurrencies for the first time can quickly get lost in cryptic terms. The blockchain makes it possible to carry out transactions between completely unknown parties in a decentralised yet tamper-proof way. Cryptocurrencies are a by-product of this technology – a reward for those who keep the network running („mining“).
What all cryptocurrencies have in common is blockchain technology. Beyond that, however, there are also many differences. For instance, the number of Bitcoin that can be newly „mined“ is capped at 21 million. By the end of February, around 19.8 million were already in circulation.
According to investing.com, there were more than 10,800 different cryptocurrencies in February. Among the most significant, besides Bitcoin, are Ether and Tether, each with their own particular features. „Meme coins“, like the ones Donald and Melania Trump issued in January, are something akin to digital commemorative coins.
Cryptocurrencies come and go. For many of them, development was halted again after only a short time. Others hover close to worthlessness, like penny stocks.
Invest in Bitcoin?
Even the prices of major cryptocurrencies such as Bitcoin can rise or fall very sharply within a very short time. Between the end of November 2021 and the end of December 2022, for example, the value of Bitcoin fell by around 70 percent. But when a rally lasts longer, as it did recently, many investors naturally start to wonder whether they are missing out on something.
„Investing in Bitcoin is always pure speculation – with very high risk,“ warns Philipp Dobbert, Head of Asset Management at quirion and at Quirin Privatbank. There was another price slump only recently, in February. Hackers had stolen assets held in Ethereum worth the equivalent of US$1.5 billion from the Bybit cryptocurrency exchange. This also weighed on the Bitcoin price. „Sharp price swings are likely to remain the order of the day – in both directions,“ Dobbert notes.
No „built-in value creation“
To back up his assessment, Dobbert points to the economic background. „If Bitcoin became worthless, that would indeed be painful for those who invested. Economically, however, it would be of no significance.“
That is because, unlike shares, Bitcoin and other cryptocurrencies have no value creation behind them. „Shares are productive capital; they give you a stake in companies and thus in the economy.“ Because the economy is geared towards growth, he says, the trend of the stock markets is, over the long term and on average, upward. „This relationship is absolutely fundamental.“
Because they lack this „built-in value creation“, cryptocurrencies are, in Dobbert's view, unsuitable for building wealth over the long term. „Crypto investments are more gambling than investing.“ That does not mean, he says, that you should steer clear of them altogether. „But if you do get involved, then do so with full awareness of the risks. And only with a very small share of your assets – one where, in case of doubt, it wouldn't be dramatic if you lost the lot.“
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