A Simple Guide to Buying and Holding Crypto
Cryptocurrency is more accessible than ever before. While trading digital assets such as bitcoin and ether used to require some level of know-how, you can now buy and sell from your phone without understanding how the crypto's underlying technology works.
That ease of access means more people may be entering the fast-moving crypto market without a clear understanding of how to properly manage crypto and its volatility. For those who aren't professional traders (and even many who are), trying to time crypto swings is a losing game, since prices can double in a month and crater just as quickly. That's why many long-term investors have settled on a simpler strategy: buy and hold, sometimes referred to affectionately as "HODLing" (short for "hold on for dear life").
The idea is to invest in the crypto of your choice, hold it through periods of volatility and sell only when the price hits a predetermined amount. No day trading, no obsessive chart-watching. For those interested in that simple approach, here's how to get started.
CRYPTOCURRENCY AND OTHER DIGITAL ASSETS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Crypto products and services are offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency.
1. Look for assets that align with your goals
There are millions of cryptocurrencies, and more coming to market everyday. Picking a single coin from such a large pool can prove difficult. If you're investing for the long term, starting with one or two well-established cryptos makes more sense than building a complicated portfolio from day one.
Bitcoin (BTC) and ether (ETH) are the most widely held cryptocurrencies. The former has the longest track record, the highest price and is often held as a store of value. The latter powers a wide network of decentralized applications and has built-in utility that goes beyond price speculation. Both are far more liquid and better understood than smaller alternative coins, or altcoins.
If you're drawn to other assets — cardano, solana or XRP, for example — make sure to do your research. Learn about the team behind the crypto and review its history of staying operational during market stress. The more speculative the coin, the higher the risk.
2. Choose where to buy your crypto
Cryptocurrency is generally bought on specialized exchanges, which mainly focus on digital assets and related services. With crypto exchanges, a centralized exchange, such as Coinbase or Kraken can be a simple place to start for crypto beginners. These platforms let you connect a bank account, verify your identity and purchase crypto in minutes. These exchanges also tend to have greater oversight and financial guardrails than their decentralized counterparts.
When evaluating an exchange, make sure they comply with U.S. regulation. Many popular crypto exchanges do not operate in the U.S. or offer only a limited, regional version of their platform due to strict legislation. You should also verify whether the exchange offers access to the assets you want, and review its security history and fee structure (exchange fees can be confusing and vary widely).
Investing platforms such as Robinhood and SoFi have been allowing users to invest in a limited number of cryptos alongside stocks, exchange-traded funds (ETFs) and other assets in recent years. Some also offer perks like no-commission crypto trades.
If you are already familiar with or use one of these platforms, buying crypto there is worth considering. The tradeoff is that these platforms often feature a narrower selection of cryptocurrencies than dedicated exchanges and, depending on the platform, you may not be able to transfer your holdings to an external wallet.
3. Move your crypto to a wallet
Leaving your crypto on an exchange may be convenient since you can connect to your account and trade or manage your assets seamlessly, but doing so comes with an added layer of risk.
Buying crypto on an exchange typically means you keep access to your private keys — a string of characters that lets you locate your assets in the blockchain. But exchanges have been hacked, become insolvent and frozen withdrawals in the past. The phrase "not your keys, not your coins" exists for a reason: If you don't control your private keys, you don't fully control your crypto.
Once you've made your purchase, consider moving your coins to a crypto wallet. Hot wallets like Zengo and Phantom are always connected to the internet, making them ideal for smaller amounts or assets you actively use, but susceptible to hacks. Cold wallets store your private keys offline on hardware like Ledger devices and are the gold standard for holding larger amounts you plan to keep long-term.
Whichever you choose, don’t forget to back up your seed phrase — the 12 or 24-word recovery phrase for your wallet — and store it somewhere offline and secure. Lose it and you can kiss access to your crypto goodbye.
4. Set a time horizon (and commit to it)
Buying and holding crypto sounds simple in practice. But the market’s volatility can make it difficult to avoid making adjustments based on your emotional reactions to price swings. A 10% or 20% drawdown over a weekend is not unusual for major cryptocurrencies.
Before you invest, decide how long you're willing to hold and how much you can afford to lose without needing the money back. If you aren’t able to keep your head cool during steep drops, you may be investing more than your risk tolerance allows — or crypto might not be the asset class for you.
Many buy-and-hold investors set a price level, time frame or life goal as their target and commit to not selling until they hit it. Writing that threshold down can help keep you grounded when emotions run high later. Having a bad week, reading a scary headline or hearing a friend panic about Elon Musk’s most recent tweet about dogecoin, however, is not a good reason to sell. The crypto market has had multiple crashes that looked catastrophic at the time only to come back stronger. Selling during downturns locks in your losses and could mean missing the market's recovery.
5. Keep track of taxes and transactions
The IRS treats crypto as property. That means selling or exchanging it may result in capital gains or losses, which makes keeping records of crypto purchase prices, dates and transactions all the more important.
Many exchanges provide your transaction history, but maintaining your own records adds another layer of documentation that can ease the burden of reporting in the long run. For tax years 2025 and 2026, the IRS requires reporting via a new 1099-DA form from crypto custodians.
Invest in crypto with confidence
CRYPTOCURRENCY AND OTHER DIGITAL ASSETS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Crypto products and services are offered by SoFi Bank, N.A., a national bank regulated by the Office of the Comptroller of the Currency.
