The crypto market is no stranger to volatility, but the past year has been particularly rough. Despite a slight rally over the past few weeks, the biggest cryptocurrencies are still down substantially from their all-time highs.
The price of Ethereum, for example, is down around 66% since its peak in November. Bitcoin is down more than 71% from its peak, and Solana is down 86%.
With some investors worried that a market crash is imminent, is now really the right time to invest in cryptocurrencies? It depends.
Should we stop investing for now?
In some cases, it may make sense to take a break from investing, especially if money is tight.
Market downturns are one of the worst opportunities to sell your investments because prices are significantly lower. If you invested in cryptocurrencies several months ago and are selling now, you are selling at a very low price and you will have heavy losses.
No one knows exactly where crypto is heading 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 the time being. If crypto prices continue to fall and you suddenly realize you need that money, selling your investments could be incurring losses.
The case for continued investment
If you have a solid reserve of savings and can afford to continue investing, now could actually be a fantastic buying opportunity.
Cryptocurrency is a notoriously expensive investment, and buying now means you’ll get the chance to invest at a fraction of the cost. Bitcoin, for example, cost nearly $70,000 per token at its peak, and is currently valued at around $21,000 per token. As for Ethereum, which reached an all-time high of around $4,800 per token, today it costs around $1,700 per token.
The key, however, is to keep your investments for the long term. Cryptocurrencies can be extremely volatile, and trying to buy and sell at the right time by timing the market is nearly impossible.
However, if you stay invested for years, you can potentially make a lot of money. For example, if you had originally invested in Ethereum three years ago, you would have seen returns of over 800% since then – and that’s despite the several major declines it has seen over that time.
There is no guarantee that any cryptocurrency will succeed over time. But keeping your investments for the long term is one of the most effective ways to protect your money.
Are cryptocurrencies right for you?
Cryptocurrencies can be a fantastic long-term investment, but they’re not for everyone. Their place in your portfolio largely depends on your financial situation and risk tolerance.
Before investing, check that your finances are stable and that you have a solid emergency fund. This way, if cryptocurrency prices fall, it will be easier to keep your money in the market until they rise again.
Also think about the level of risk you are willing to tolerate. Crypto can potentially be a lucrative investment, but it is still speculative at the moment. If he succeeds, you can earn a lot of money. But if it fails, you could lose your entire investment. Before you buy, ask yourself if this is a risk you’re willing to take.
There is no right or wrong answer to the question of whether it is a good idea to buy cryptocurrencies, because it depends on your particular situation. But by weighing the pros and cons, you can more easily decide if it’s right for you.
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