Cryptocurrency Forecasts: Is the Risk Calculable?

Cryptocurrencies have been discussed as an asset class for years, often with very large numbers and very little context. This article explains how they work technically, how they differ from currencies and stocks, and why their price development cannot be reliably predicted. It deliberately makes no recommendation as to whether investing makes sense. That question depends on personal circumstances and cannot be answered in an article written for a general audience.

Key Points at a Glance

• A cryptocurrency is a purely digital form of value whose transfer is secured cryptographically and recorded on a blockchain.

• To hold and transfer it, you need a wallet, which is secured by a private key. Anyone who loses that key loses access permanently, and there is no way to recover it.

• Cryptocurrencies are not backed by anything and give you no claim on any underlying asset. Unlike a share, no company and no asset stands behind them.

• Price swings are large; double-digit daily moves are not unusual, and a total loss is possible.

• Price forecasts vary widely and have repeatedly proven unreliable. That is not a coincidence; it is a feature of the market.

How do Bitcoin and other cryptocurrencies work?

A cryptocurrency is any currency that exists exclusively in digital form and secures its transactions using cryptographic methods. The oldest and best known is Bitcoin, whose concept was published in 2008 under the pseudonym Satoshi Nakamoto.

In the conventional monetary system, a bank maintains the accounts of both parties and processes the transfer. Cryptocurrencies do away with this central authority. The transfer happens directly between the parties, and the transaction is recorded in a public ledger that many computers verify independently of one another.

What is the blockchain?

Think of the blockchain as a public ledger. Every transaction is stored in it and remains permanently traceable. Entries are bundled into blocks; once a block is full, the next one is appended, forming a continuous chain. This structure makes retroactive changes practically impossible, which also means an incorrectly executed transfer cannot be reversed.

What is a wallet?

A wallet holds the credentials that give access to your holdings. Instead of an account number, you receive a wallet address. What matters is the associated private key: whoever holds it controls the funds. Whoever loses it loses access permanently. There is no authority that can reset it and no customer service that can reverse a mistaken transfer.

What distinguishes cryptocurrencies from currencies and stocks?

The key difference lies in backing. If you buy a share, you become a part owner of a company and are entitled to a share of its earnings. Behind a cryptocurrency there is no company, no tangible asset and no promise of payment. Its price results solely from what other market participants are willing to pay for it.

Government-issued currencies, so-called fiat money, differ in another respect: central banks can expand their supply, whereas the supply of many cryptocurrencies is capped by protocol. For Bitcoin, the cap is 21 million units. Whether this scarcity establishes value is disputed among experts.

Money traditionally fulfils three functions: medium of exchange, unit of account and store of value. Whether cryptocurrencies fulfil all three is doubted, above all because of their high volatility, which undermines their function as a store of value.

Risks you should know

Price risk. Double-digit daily price moves are not unusual. Unlike broadly diversified investments, there are hardly any mechanisms to meaningfully limit this risk.

Total loss. A cryptocurrency can become worthless without any insolvency proceeding or residual value. This has happened repeatedly with smaller projects.

Custody risk. Anyone who leaves funds on a trading platform depends on that platform’s solvency and security. The collapse of the FTX exchange in November 2022 affected private and institutional investors alike.

Operational risk. A typo in the recipient address or a lost key leads to permanent loss. There is no chargeback.

No deposit protection. Crypto holdings are not covered by the Swiss deposit protection scheme that applies to bank deposits. That is a structural difference from a bank account, not a detail.

Regulatory classification. Contrary to a common assumption, the sector is in fact regulated in Switzerland. Since 2021, the DLT Act, which governs distributed ledger technology, has set out rules for ledger-based securities and for trading systems, and anyone who provides crypto services on a commercial basis is subject to supervision. What is regulated, however, are the service providers, not the price of the asset. Regulation does not protect against losses.

Tax treatment. Crypto holdings count as taxable assets in Switzerland. How gains are treated depends on whether the activity is classified as private asset management or as commercial securities trading. For frequent trading, this is a real question and should be clarified with a tax advisor.

Why the price cannot be reliably forecast

Forecasts from well-known market participants regularly diverge by a wide margin, ranging from a full recovery to lasting irrelevance. Warren Buffett has been dismissive for years, while others expect prices to rise over the long term.

This spread is not a sign of sloppy analysis. It follows from the nature of the asset itself. For a share, a value can at least be approximated from earnings, net assets and distributions. For an asset with no cash flow, this anchor is entirely absent. What remains is a statement about future supply and demand, and that is speculation, even when it comes with a number attached.

On top of this, several central banks are preparing state-issued digital currencies. How this will affect private cryptocurrencies remains to be seen.

The honest answer to the question in the title is therefore: only to a limited extent. The risk can be described, and its structure understood. It is not calculable in the sense of a reliable expectation, because there is no basis for one.

How we approach this at Everon

Everon is a FINMA-regulated Multi-Family Office with its own portfolio management team. Our approach is systematic and rules-based, and the strategy is built on investment horizon, risk capacity and objectives, not on whichever asset class happens to be getting attention.

If you would like to understand what role a particular asset class could realistically play in your situation, schedule a conversation. You can also find the fundamentals of building a portfolio in our article on investing money in Switzerland.

Last reviewed: August 2026. Sources: FINMA, Swiss Federal Tax Administration, Swiss National Bank.