Key Points

• Keep your crypto allocation small to reduce risk.

• Invest in large cryptocurrencies that have survived bear markets.

• Take a long-term outlook and don't spend too much time monitoring crypto prices.

• 10 stocks we like better than Bitcoin ›

Cryptocurrency investing is a wild ride. If you had bought one Bitcoin (CRYPTO: BTC) on Nov. 10, 2021, it would've cost you about $67,000. As of July 8, 2025, your investment would be worth $109,000 for an impressive 62% return -- if you held on while the price dropped as low as $16,000 in 2022.

It's hard to stay calm with that kind of volatility. No one likes to see their investments plummet in value, but that's par for the course with crypto. If you've decided to invest in digital assets, there are a few ways to make the experience less stressful.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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1. Limit crypto to a small part of your portfolio

The best way to invest in crypto worry-free is to limit how much money you put into it. You may want to start by setting aside 1% or 2% of your investment portfolio for cryptocurrency. If you feel comfortable going higher later, you could bump that up to 3%, 5%, or as high as 10%. Personally, I wouldn't allocate more than 10% of my portfolio to crypto because of the risk involved.

A reasonable asset allocation makes those inevitable price swings much easier to manage. If you have a $100,000 portfolio, and $3,000 of it is in crypto, a 50% plunge in your crypto holdings isn't a huge issue. If you have $50,000 in crypto, it's a different story.

Since cryptocurrencies have the potential to rapidly increase in value, you can still get excellent returns this way. Just remember that if your crypto investments take off, you may need to rebalance your portfolio so it doesn't become too crypto-heavy.

2. Invest in the biggest coins

I've invested in quite a few cryptocurrencies, both large and small, over the years. If I could go back and change one thing, I would've avoided the smaller altcoins and invested more of my money in Bitcoin (ideally in 2010 or 2011, given the option).

It's tempting to skip the big names and invest in coins that haven't caught on yet. Everyone wants to find a cryptocurrency that's going to explode, deliver 1,000 times growth, and turn early investors into multimillionaires.

The problem is that the crypto market has a massive number of scams, meme coins, and low-quality projects. You're far more likely to lose most or all of your money when you invest in smaller, unproven coins. Out of nearly 7 million cryptocurrencies listed on the GeckoTerminal tracking tool since 2021, 3.7 million have stopped trading. That's a 52.7% failure rate, and it doesn't include cryptocurrencies that are still trading but have lost most of their value.

To improve your odds of success, stick with large cryptocurrencies that have been around for several years or longer. Bitcoin, Ethereum, XRP, and Solana all fit this description. They're still volatile, but they've proven to be serious projects and have survived bear markets.

3. Don't micromanage your crypto holdings

Spending too much time monitoring your investments can be stressful. This is true with any type of asset, stocks included, but it's worse with cryptocurrency due to how much prices can fluctuate.

There's nothing wrong with staying up to date with the cryptocurrencies you own and the market as a whole. But try not to pay too much attention to the everyday price movements. Hopefully, you've chosen cryptocurrencies you believe have long-term value. If so, you could end up holding them for five to 10 years or longer -- more than enough time to ride out the occasional dip.

If you implement these three strategies, you can invest in crypto without any trouble sleeping at night. Limiting how much money you put into crypto is a simple and effective way to cap your downside. When you invest in proven coins, your portfolio is unlikely to be wiped out in a bear market. And if you avoid checking price charts every day, you'll save yourself a lot of unnecessary stress.

Should you invest $1,000 in Bitcoin right now?

Before you buy stock in Bitcoin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

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Lyle Daly has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

The rapid growth of artificial intelligence (AI) has already had a massive impact on the stock market. Many AI companies have seen their valuations skyrocket. And according to recent research, this is just the beginning.

A report released by UN Trade and Development (UNCTAD) earlier this year projects that the global AI market will grow from $189 billion in 2023 to $4.8 trillion by 2033. Given that growth, there's a strong possibility that quality AI stocks will outperform the market over the next five to 10 years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Here are two that could be poised for explosive growth.

Image source: Getty Images.

1. Applied Digital

Applied Digital (NASDAQ: APLD) builds and buys data centers where companies can rent space and install their own servers. When it started out, Applied Digital catered to blockchain companies, but it later switched its focus to the high-performance computing (HPC) and AI industries.

It's a straightforward business model, although Applied Digital did take a stab at offering AI cloud services through a subsidiary it launched in 2023, Sai Computing. Earlier this year, it announced plans to close that chapter by selling its cloud segment and transforming itself into a real estate investment trust (REIT).

Getting back to what it does best could be a positive move for Applied Digital. Its data center hosting business is now in the black, with a profit of $8.8 million in its fiscal 2025 third quarter, which ended on Feb. 28. The cloud services business isn't. It booked a loss of $10.3 million in the quarter, despite being the faster-growing segment.

On the data center front, Applied Digital announced two lease agreements with AI hyperscaler Coreweave on June 2. The agreements will last approximately 15 years and are expected to generate about $7 billion in revenue. Applied Digital stock has been soaring since then -- it's up 51% since the start of June.

The top tech companies are spending heavily on data centers and AI infrastructure. Applied Digital is well-positioned to capitalize on that spending, especially as it transitions to a REIT model and focuses on its data center business.

2. Lemonade

At first glance, Lemonade (NYSE: LMND) might not seem like an AI stock. It's an insurance company offering renters, homeowners, car, pet, and term life policies. But Lemonade has made AI a key part of its business since it launched in 2015.

It uses AI at every stage of its processes. New customers can quickly get quotes on policies through the company's AI chatbot, Maya. It uses AI during the underwriting process to calculate people's premiums and to assign a lifetime value (LTV) to each customer based on their likelihood of filing a claim, switching insurance providers, or bundling multiple insurance products.

The claims process also has built-in AI, allowing Lemonade to fully automate about 55% of its claims, according to Chief Claims Officer Sean Burgess. In addition, Burgess says that Lemonade handles over 40% of customer service tickets with AI.

Lemonade isn't profitable yet, but it beat expectations in its most recent quarter. Revenue rose 27% year over year to $151.2 million in the first quarter. Its in-force premium (IFP), which is the total premium value across all active policies, also increased by 27% to $1.0 billion.

That made it the sixth consecutive quarter where Lemonade's IFP has grown, and management has set an ambitious goal of growing its IFP to $10 billion in the coming years. In another good sign, its gross loss ratio -- the share of its premiums that get paid out as out claims -- is declining. It went from 88% in the third quarter of 2023 to 73% in the first quarter of 2025.

While investing in young businesses that are losing money can be risky, it also gives you an opportunity to get in on the ground floor. I think that's where we're at with Lemonade. This company's high-tech business model has been great for attracting customers, particularly younger customers -- 70% of its customer base is under 35. Based on Lemonade's financial growth and embrace of AI technology, it could be poised to take off.

Should you invest $1,000 in Applied Digital right now?

Before you buy stock in Applied Digital, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Applied Digital wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $676,023!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,692!*

Now, it’s worth noting Stock Advisor’s total average return is 793% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lemonade. The Motley Fool has a disclosure policy.