IRS Reports Average Tax Refunds for 2025
According to the Internal Revenue Service (IRS), the typical tax refund for the 2025 filing season stands at $3,271 as of March, representing a significant financial boost for many taxpayers. With the ever-present allure of consumerism in America, there are countless opportunities for individuals to spend their refunds on luxury items and indulgences.
Smart Financial Decisions with Tax Refunds
However, a substantial number of taxpayers are choosing to allocate their refunds more judiciously. Instead of splurging, they are focusing on paying off debts, establishing emergency reserves, or making investments. Among these options, investing in cryptocurrency has gained notable interest. A recent study from Attest, a consumer research platform, reveals that nearly 25% of taxpayers intend to use their refunds to purchase cryptocurrency, with millennials leading this trend.
Evaluating Cryptocurrency Investment for Millennials
The decision to invest in cryptocurrency is comparable to any other investment—it is wise if it aligns with one’s risk appetite, investment timeline, financial situation, strategy, and objectives, as well as the prevailing market conditions. The Securities and Exchange Commission (SEC) provides a comprehensive list of considerations for potential investors, which apply equally to the crypto space.
Unique Advantages and Disadvantages of Cryptocurrencies
While the foundational evaluation for adding crypto to an investment portfolio mirrors that of other asset classes, cryptocurrencies possess distinct characteristics that differentiate them from traditional investments such as stocks and bonds.
Potential for Extraordinary Returns
One appealing aspect of cryptocurrencies is their capacity for considerable profits. For instance, Bitcoin began trading in 2019 at approximately $3,800 and surged to over $90,000 by early 2025, illustrating the potential for remarkable gains that are often unattainable in conventional markets.
Increasing Mainstream Adoption of Cryptocurrencies
Although cryptocurrency remains relatively young compared to traditional fiat currencies, it has transitioned from niche investments into broader public acceptance. An increasing number of cryptocurrencies are demonstrating practical utility, more businesses are accepting them as payment, several crypto exchanges have gone public, and some exchange-traded funds (ETFs) now incorporate digital currencies into their portfolios.
Accessibility of Cryptocurrency Investments
Cryptocurrency investments are also highly accessible; with just a digital wallet and internet access, investors can manage their assets anytime, anywhere.
Extreme Market Volatility
On the flip side, cryptocurrencies are notorious for their extreme price volatility, which may prove overwhelming for many mainstream investors. For example, during recent market upheavals, traditional stock indexes experienced significant drops followed by swift recoveries, whereas similar fluctuations in the crypto market would be considered routine and often go unnoticed.
Regulatory Challenges Facing Cryptocurrencies
The regulatory landscape for cryptocurrencies is still developing, characterized by ongoing changes and regional variations. This uncertainty can complicate investment decisions and strategies.
Risks of Personal Security and Asset Loss
Investors in cryptocurrencies carry the responsibility of securing their assets in specialized digital wallets. If access keys are lost, there is a risk of total loss of those investments. Furthermore, while cryptocurrencies can function as a means of exchange, the IRS categorizes them as property, subjecting transactions to standard capital gains tax regulations.
