Should You Really Be Investing in Crypto Right Now?

The crypto market is no stranger to volatility, but the past year has been particularly difficult. Despite a slight rally in recent weeks, the largest cryptocurrencies are still substantially down from their all-time highs.

The price of Ethereal (ETH -6.01%)for example, it is down about 66% from its peak in November. Bitcoin (BTC -6.59%) is down more than 71% from its peak, and Solarium (SUN -6.62%) has dropped by a whopping 86%.

With some investors worried that a market crash is coming, is now really the right time to invest in crypto? It depends.

Should you stop investing for now?

In some cases, taking a break from investing can be a smart move, especially if money is tight.

Market downturns are one of the worst opportunities to sell your investments because prices are significantly lower. If you initially invested in crypto several months ago and sold now, you would be selling at a deep discount and locking in those losses.

No one knows exactly where crypto is headed in the coming months. But if you can’t afford to leave your money invested for at least a year or two, it may be best to avoid investing for now. If cryptocurrency prices continue to drop and you suddenly realize you need that money, selling your investments could be expensive.

The case for continuing to invest

If you have a solid savings bank and can afford to continue investing, this could be a fantastic buying opportunity right now.

Cryptocurrency is a notoriously expensive investment, and buying now means you’ll have the opportunity to invest at a fraction of the cost. Bitcoin, for example, cost nearly $70,000 per token at its peak, and is currently priced at around $21,000 per token. And Ethereum, which hit an all-time high of about $4,800 per token, is now around $1,700 per token.

However, the key is to keep your investments for the long term. Cryptocurrencies can be extremely volatile, and trying to buy and sell at just the right time by timing the market is next to impossible.

However, if you stay invested for years, you could make a lot of money. For example, if you had initially invested in Ethereum three years ago, you would have seen returns of over 800% since then, and that’s despite the several major downturns it experienced during that time.

Ethereum Price data by YGraphics

There are no guarantees that any cryptocurrency will be successful over time. But keeping your investments long-term is one of the most effective ways to keep your money safer.

Is Cryptocurrency Right for You?

Cryptocurrencies can be a fantastic long-term investment, but they are not suitable for everyone. What belongs to your portfolio will largely depend on your financial situation and risk tolerance.

Before you invest, double check that your finances are stable and that you have a healthy emergency fund. That way, if cryptocurrency prices drop, it will be easier to keep your money in the market until they recover.

Also, consider how much risk you are willing to tolerate. Crypto can potentially be a lucrative investment, but it is still speculative at this point. If you are successful, you can make a lot of money. But if it fails, you could lose your entire investment. Before you buy, think about whether it’s a risk you’re willing to take.

There is no right or wrong answer as to whether it is a good idea to buy cryptocurrencies as it will depend on your particular situation. But weighing the pros and cons can make it easier to decide if it’s right for you.

Katie Brockman has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin, Ethereum and Solana. The Motley Fool has a disclosure policy.

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