Bitcoin IRA Vs. Gold IRA: How They Differ

Photography by Getty Images; Illustration by Bankrate

An IRA is a popular way to save for retirement, and savers have a variety of investments they can make using an IRA. While retirement savers may turn to traditional investments such as stocks or funds, they have newer options such as the cryptocurrency Bitcoin and gold. Savers can set up a Bitcoin IRA or a gold IRA and enjoy the price appreciation in these assets.

Here is what a Bitcoin IRA and a gold IRA are, how they work and their key differences. 

Bitcoin IRA and gold IRA: What are they?

Both a Bitcoin IRA and a gold IRA are kinds of self-directed IRAs that allow you to own the respective assets in your retirement account. 

What is a Bitcoin IRA?

A Bitcoin IRA is a type of IRA that holds Bitcoin or other cryptocurrencies as a retirement investment. A Bitcoin IRA requires a specialized custodian to hold the asset, due to IRA rules that prohibit individuals from the self-custody of IRA assets themselves. 

Like any IRA, a Bitcoin IRA lets you save on a tax-deferred basis in a traditional IRA or on a tax-free basis in a Roth IRA. In a traditional IRA, you won’t pay taxes until you take withdrawals, while a Roth IRA means you won’t ever pay taxes on your withdrawals in retirement. Contributions to an IRA are limited to $7,000 (in 2025), while individuals age 50 and older can contribute up to $8,000 each year. 

Instead of owning Bitcoin directly, however, you could own one of the best Bitcoin ETFs, which own Bitcoin and closely track the performance of the cryptocurrency.

What is a gold IRA?

A gold IRA is a type of IRA that holds physical gold and other precious metals such as bars or coins as a retirement investment. These assets must be held by a special depository, due to IRS rules that prohibit individuals from taking custody of IRA assets themselves. 

Like any IRA, a gold IRA allows you to save on a tax-deferred or tax-free basis, so you won’t pay taxes until you start making withdrawals in retirement (or not at all, if you use a Roth IRA). Contributions to a traditional or Roth IRA are capped at $7,000 (in 2025), while those age 50 and older can contribute a maximum of $8,000.

The best gold IRA companies offer a range of investible gold and low maintenance fees.

Pros and cons of Bitcoin IRAs and gold IRAs

Pros of a Bitcoin IRA

• Strong returns over time: Bitcoin has delivered strong returns over time, as evidenced by its price history of “up and to the right.”  Of course, that’s no guarantee that those outstanding returns can continue. 
• Tax advantages: An IRA offers the ability to save on a tax-deferred or tax-free basis for decades and then withdraw the funds in retirement tax-free (with a Roth IRA) or pay tax at ordinary rates (traditional IRA).  
• Diversification: Bitcoin may offer the benefits of diversification to a portfolio of stocks and bonds, reducing the portfolio’s overall volatility. 

Cons of a Bitcoin IRA

• Dubious value: The value of Bitcoin is based entirely on what traders will pay for it. Bitcoin is not backed by the assets or cash flow of an underlying business the way a stock is. 
• Volatility: Bitcoin is among the most volatile assets in existence, meaning owning it can be a stomach-churning exercise. 
• Fees: If you’re buying Bitcoin through a crypto exchange, it may cost significantly more than through an ETF or buying a traditional asset. The IRA custodian may charge significant setup and maintenance fees as well.  
• Can’t hold traditional investments: A Bitcoin IRA is specifically for crypto assets, not traditional securities such as stocks and bonds. 

Pros of a gold IRA

• Store of value: Gold has long been considered a defensive store of value, acting as an inflation hedge over time. This quality means that gold tends to hold its value, and it’s a “turn to” asset during tough economic times.
• Tax advantages: An IRA offers the ability to save on a tax-deferred or tax-free basis for decades and then withdraw the money in retirement tax-free with a Roth IRA or pay tax at ordinary rates using a traditional IRA.  
• Diversification: Gold can help diversify a portfolio, since it responds differently to economic conditions than do stocks and bonds. This diversification can help reduce a portfolio’s overall volatility.

Cons of a gold IRA

• High fees: A gold IRA often charges relatively high fees, including setup fees and annual maintenance fees, such as for the depository. You’ll need a substantial investment in gold to reduce the average cost of these fees. It can be much cheaper to make alternative gold investments that actually perform better than physical gold.
• Lower returns than stocks: The returns of stocks have dwarfed the returns of gold over time, meaning investors are trading huge returns for the perceived safety of gold.
• Can’t hold traditional investments: A gold IRA is focused on gold and other precious metals, so it can’t hold traditional investments such as stocks and bonds. However, you can purchase gold ETFs in a traditional investment account. 

Bitcoin IRA vs. gold IRA: How they differ

Here are the key differences between a Bitcoin IRA and a gold IRA. 

• Bitcoin has offered stronger returns: Bitcoin’s returns since it was developed in 2009 have been nothing short of extraordinary. That doesn’t mean that trend will continue, of course, but it does mean that Bitcoin has dramatically outperformed gold. 
• Bitcoin is more volatile than gold: Bitcoin exhibits more up-and-down volatility than does gold, which tends to be more stable, acting as a defensive store of value over time. 
• Bitcoin is much riskier: Bitcoin has a much shorter lifetime and its value is based on what other traders will pay for it, rather than being based on the assets or cash flow of an underlying business. In contrast, gold has been a store of value for more than 2,000 years, and it’s well regarded as an inflation hedge. 
• They’re stored differently: Bitcoin is stored electronically, while gold in an IRA must be stored physically in an IRS-approved depository. 

Because these two kinds of accounts both are based on the IRA, they offer the same types of saving and retirement benefits as all IRAs, as well as annual caps on contributions. 

Bottom line

Bitcoin IRAs and gold IRAs are two specialized ways to take advantage of the tax and savings benefits of an IRA. However, many investors continue to use a regular IRA at one of the best brokers for IRAs and then buy funds that own gold or bitcoins to reduce their investment costs. 

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.