Introduction: The $10,000 Question — Crypto or Shares?
Let’s say you had $10,000 to invest in January 2019.
If you put it into Bitcoin, you’d have had roughly $68,000 by the end of 2023 — even after the brutal 2022 crash. If you put it into the ASX 200, you’d have around $14,500, including dividends.
So crypto wins, right?
Not so fast.
A mate of mine went all-in on Ethereum in November 2021. Six months later, he’d lost 65% of his portfolio. He didn’t sell — but he also didn’t sleep properly for about a year.
The numbers tell one story. The lived experience tells another.
This article breaks down both — with real data, actual tax implications for Australians, and a framework to help you figure out which one (or what mix) actually fits your situation.
What You’re Actually Buying (And Why It Matters)
Before comparing returns, it helps to understand what you’re actually getting when you buy each.
When You Buy Shares
You’re buying a small piece of a real company. That company has:
- Revenue and expenses
- Staff and assets
- Regulatory oversight
- (Often) dividends paid to shareholders
If you buy CBA shares, you own a slice of one of Australia’s biggest banks. Its value is tied to how well the bank actually performs.
When You Buy Crypto
It depends on what you’re buying.
Bitcoin is essentially a decentralised digital asset — no company behind it, no earnings, no dividends. Its price is driven almost entirely by supply, demand, and market sentiment.
Ethereum is different — it powers a network of decentralised applications. There’s real usage behind it, but valuing it is still far less straightforward than valuing a company.
Altcoins? Many have almost no underlying utility. Some are outright speculative bets.
The key difference: Shares have an intrinsic value anchor (company earnings). Most crypto does not — or if it does, it’s harder to measure.
This isn’t a reason to avoid crypto. It’s just something you need to understand before putting money in.
Risk & Volatility: A Side-by-Side Reality Check
Let’s get specific.
How Much Can These Things Actually Move?
| Asset | Typical Annual Volatility |
|---|---|
| ASX 200 | ~12–15% |
| US S&P 500 | ~15–18% |
| Bitcoin | ~60–80% |
| Ethereum | ~80–100% |
| Most altcoins | 100–200%+ |
Volatility means how much the price swings around. Higher volatility = bigger potential gains, but also bigger potential losses.
In 2022, Bitcoin fell from around USD $47,000 in January to under USD $16,000 by November. That’s a 66% drop in under 12 months.
The ASX 200 fell about 6% over the same period.
What Does This Feel Like in Practice?
If you had $50,000 in Bitcoin at the start of 2022, by year’s end you had roughly $17,000.
If you had $50,000 in an ASX index fund, you had around $47,000.
Shares can fall hard too — the ASX dropped 35% during the COVID crash in early 2020. But they recovered within months. Bitcoin took until late 2023 to approach previous highs.
Bottom line: Crypto isn’t just “more risky” in theory. The swings are real, and they happen fast.
Returns Compared: Real Numbers from the Last 5 Years
Here’s where it gets interesting.
5-Year Performance (Jan 2019 – Dec 2023)
| Asset | Approx. 5-Year Return |
|---|---|
| Bitcoin (BTC) | ~580% |
| Ethereum (ETH) | ~1,100% |
| ASX 200 (with dividends) | ~45% |
| S&P 500 (AUD-hedged) | ~95% |
| Australian residential property (avg) | ~35–45% |
These numbers look like a slam dunk for crypto. And over this specific window, it was.
But here’s the thing most people miss: the timeframe matters enormously.
If you’d bought Bitcoin in November 2021 (near the peak) and checked in November 2022, you were down 75%. If you held ASX shares over that same 12 months, you were roughly flat.
The Sequence Risk Problem
One of the trickiest parts of crypto investing is when you buy.
We ran a simple comparison: two hypothetical investors, both investing $500/month.
- Investor A started in January 2019 → came out well ahead
- Investor B started in November 2021 → still down as of mid-2023
Same asset. Very different outcomes. Shares, while slower, are less sensitive to entry timing over a 5-year horizon.
Dollar-Cost Averaging Changes the Picture
If you’d invested $200/month into Bitcoin every month from Jan 2019 to Dec 2023 (total $12,000 invested), your portfolio would have been worth roughly $28,000–$32,000 depending on exact dates.
Same $200/month into ASX 200 index fund: around $15,000–$17,000.
Crypto still wins — but the gap narrows significantly when you remove the “bought at the perfect time” assumption.
Tax Treatment in Australia: CGT, DeFi, and What the ATO Actually Cares About
This is where a lot of Aussie investors get caught out.
The ATO has been pretty clear: crypto is not currency. It’s a capital gains tax (CGT) asset — the same category as shares.
The Basics
- Buy and hold: When you sell, you pay CGT on the profit. If you’ve held for more than 12 months, you get the 50% CGT discount.
- Trading frequently: If the ATO decides you’re running a trading business (not just investing), your gains may be taxed as ordinary income — no discount.
- Crypto-to-crypto swaps: Yes, this is a taxable event. Trading ETH for SOL is treated as if you sold ETH for AUD, then bought SOL. Many people miss this.
The DeFi Grey Zone
Decentralised finance (DeFi) is where things get messy.
The ATO has issued guidance, but it’s still evolving. Here’s where they currently stand:
- Staking rewards: Generally treated as ordinary income when received (not when sold)
- Liquidity pool participation: Can trigger CGT events when you add or remove assets
- Wrapping tokens (e.g. ETH → WETH): The ATO’s position is still unclear; many accountants treat it conservatively as a disposal
Shares Are Cleaner (But Not Simple)
With shares, the tax treatment is more established:
- Dividends: Taxed as income, but franking credits can offset this (great for Aussie-listed shares)
- Capital gains: Same 50% discount after 12 months as crypto
- Reporting: Your broker provides annual statements; crypto exchanges vary wildly in quality
A Real Cost You Might Not Have Considered
If you’re actively trading crypto — even just rebalancing between coins — the tax compliance cost adds up. Specialist crypto accountants in Australia typically charge $300–$800/year for basic portfolios, and more for DeFi users.
Shares? If you’re using a standard broker and holding index funds, your tax return barely changes.
Practical tip: Use a crypto tax tool like Koinly or CoinTracking from day one. Reconstructing years of transaction history later is painful and expensive.
Who Should Choose Crypto, Who Should Stick to Shares
This isn’t a one-size-fits-all answer. Here’s how to actually think about it.
Crypto Might Suit You If:
- You have a long time horizon — 7+ years to ride out potential crashes
- You can stomach big drops — losing 50–70% temporarily without panic-selling
- You’re investing money you genuinely don’t need — not your emergency fund, not your house deposit savings
- You’re already comfortable with tech and self-custody — or willing to learn
- You have a small allocation as part of a broader portfolio — not your entire net worth
Shares Might Suit You Better If:
- You’re investing for a specific goal with a set timeframe (retirement, property deposit in 5–7 years)
- You want passive income — dividends, particularly franked ones from ASX stocks, can generate real cash flow
- You prefer simplicity — set and forget inside a brokerage or super fund
- You’re risk-averse or close to retirement
- Tax efficiency matters a lot — especially with franking credits inside super (15% tax environment)
The Middle Ground
Honestly? Most experienced investors we’ve spoken to aren’t picking one or the other.
A common approach: 80–90% in traditional assets (shares, property, super), 5–15% in crypto. Enough to benefit if crypto runs, not enough to wreck you if it doesn’t.
How Aussie Investors Are Splitting Their Portfolios Right Now
Based on a 2023 survey by Finder, around 25% of Australians own or have owned cryptocurrency — up from around 17% in 2020. But average allocation tells a different story.
Among Aussie investors who hold both shares and crypto:
- ~60% keep crypto below 10% of their total portfolio
- ~25% hold 10–30% in crypto
- ~15% are 30%+ in crypto (these tend to be younger, higher-risk-tolerance investors)
What the Super Funds Are Doing
Interestingly, some Australian superannuation funds — including certain SMSFs — have started including small crypto allocations.
As of mid-2023, the ATO reported over 25,000 SMSFs holding crypto assets, with an average allocation of around 2–5% of total fund value.
For most Australians, crypto is still a satellite position — not a core holding.
The ETF Shift
One thing that’s changed the conversation: the launch of spot Bitcoin ETFs in the US in early 2024 made institutional access easier. Australia has had Bitcoin ETFs on the ASX since 2022 (ETHI and CBTC being early examples), which lets investors get exposure without managing wallets or private keys.
This has made the “shares vs crypto” binary feel a bit outdated — you can now hold crypto-exposure through your normal brokerage account, with the same reporting structure as ETFs.
The Bottom Line: A Decision Framework You Can Actually Use
Forget the hype. Here’s a simple way to work through this.
Step 1: Separate Your Money Into Buckets
- Bucket 1 – Essential safety net: 3–6 months of expenses in cash. Never invest this.
- Bucket 2 – Near-term goals (1–5 years): House deposit, car, wedding. Keep this in high-interest savings or low-risk investments. No crypto here.
- Bucket 3 – Long-term wealth building (5+ years): This is where shares and possibly crypto belong.
Step 2: Build Your Core First
Before touching crypto, make sure you have:
- A diversified share portfolio (ASX index fund, or global ETF like VGS)
- Contributions going into super (especially if your employer matches)
- An emergency fund
Once those are in place, you’re in a much stronger position to take on the extra risk of crypto.
Step 3: If You Add Crypto, Size It Properly
A rough rule of thumb used by many financial planners: don’t put more into crypto than you’d be comfortable losing entirely.
If losing $5,000 would genuinely not affect your financial goals or mental health — that’s a reasonable ceiling.
Step 4: Pick Your Exposure Method
Options for Aussie investors:
- Direct purchase via Coinbase, Swyftx, CoinSpot (you hold the asset directly)
- ASX-listed crypto ETFs (simpler, no wallet management, standard tax reporting)
- SMSF investment (complex, requires SMSF setup, but can have tax advantages)
Step 5: Set a Review Schedule
Don’t check crypto prices daily — it’ll mess with your head. Set a calendar reminder to review your portfolio every 6 months. Rebalance if your crypto allocation has drifted significantly from your target.
FAQ
Is crypto legal to invest in for Australians?
Yes, completely legal. The ATO recognises crypto as a legitimate asset class and requires you to report gains and losses on your tax return. The key thing is keeping good records — every transaction, every swap, every staking reward.
Do I have to pay tax when I transfer crypto between wallets?
No — moving crypto between wallets you own (e.g. from an exchange to your hardware wallet) is not a taxable event. Tax is triggered when you sell, swap, spend, or give away crypto. The ATO looks at beneficial ownership, not just where the coins are sitting.
Can I hold crypto inside my super fund?
Yes, but only through a Self-Managed Super Fund (SMSF). Standard retail or industry super funds don’t offer direct crypto exposure (though some offer indirect exposure via crypto-related ETFs). Setting up an SMSF has real costs and compliance obligations — it’s generally only worth it if you have $250,000+ in super.
Which has been the better investment — crypto or shares — over the last decade?
Crypto has delivered higher returns over the last decade, but with dramatically more volatility. Bitcoin’s 10-year return from 2014 to 2024 dwarfs the ASX 200 by a wide margin — but you’d have needed to sit through multiple 70–80% drawdowns without selling. Most people didn’t. The question isn’t just which performed better — it’s which one you could actually hold through the bad periods.
What’s the minimum I should invest before it’s worth bothering with crypto?
There’s no official minimum, but practically speaking, if you’re investing less than $500, the transaction fees and tax compliance costs start to eat into returns noticeably. Many Aussie platforms have minimum trades of $10–$20, but a portfolio worth tracking probably starts around $1,000–$2,000 in crypto exposure.