2 reasons to invest in crypto – and 2 reasons not to

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Cryptocurrency is a relatively new type of investment, and it is an intriguing option for many people.

During the crypto boom earlier this year, many types of cryptocurrency saw their prices skyrocket. The price of Bitcoin (CRYPTO: BTC), for example, climbed more than 100% between the start of the year and mid-April. Ethereum (CRYPTO: ETH) has risen almost 250% during this period, and the price of Dogecoin (CRYPTO: DOGE) has jumped over 3,000%.

While prices have fallen since peaking, these incredible returns have made cryptocurrencies impossible to ignore. If you’re hesitant to invest, there are two reasons why you might consider buying now – and two reasons why you shouldn’t.

Image source: Getty Images.

Why Consider Investing In Cryptocurrency 1. It Could Potentially Become Mainstream One Day

Cryptocurrency has the potential to change lives. It could someday become a common form of payment, it could provide a way to hedge against inflation, and blockchain technology – the basis of cryptocurrency – could also have a huge impact on the way we do business. .

If crypto becomes mainstream, its price could hit new highs. Bitcoin’s price is currently close to $ 44,000 per token, but some experts are predicting that it could one day reach up to $ 500,000 per token. Depending on the degree of cryptocurrency adoption, there could be a lot of earning potential for early adopters.

Of course, no one knows for sure if this will actually become common. But if you are the type to adopt quickly and believe that cryptocurrency has a chance to change society as we know it, now may be the time to buy.

2. You would rather risk losing money than live with “what ifs”

Even if you’re a cryptocurrency skeptic, there’s another reason to consider investing: you don’t want to live with the regret of not buying if it becomes common.

If you are not determined to invest, imagine two different scenarios. First of all, think about how it would feel if you bought cryptocurrency now, but it ended up failing and you lost every dollar invested. Second, think about how it would feel if you chose not to invest, but it became a huge success and you missed out on that income.

For some people, losing money is the worst case scenario. This is good, and that means crypto is probably not the right investment for you. But if you’d rather risk losing money so you don’t have to live with the “what if” down the road, you might consider investing.

Why cryptocurrency may not be right for you 1. It is a highly speculative investment

One of the biggest risks in buying cryptocurrency is that no one knows what the future holds. Unlike stocks, cryptocurrency does not have a long history. Bitcoin was launched a little over ten years ago, and many other currencies are only a few years old. It is not a long time to determine if these investments will continue to grow in the long term.

Even experts are divided over its potential. Tesla CEO Elon Musk, for example, has been a strong supporter of Bitcoin and Dogecoin, while Warren Buffett has expressed his disdain for cryptocurrency.

There’s a chance it will be widely adopted one day, but it might as well fail. If you are a risk averse investor, these odds are not ideal.

2. It’s extremely volatile

Even if cryptocurrency is successful over the long term, it is still an incredibly volatile investment. This year alone, Bitcoin has already seen a roller coaster of ups and downs.

Bitcoin price data by YCharts

As its price has started to recover from its most recent crash, Bitcoin is no stranger to volatility. The cryptocurrency has lost around 80% of its value in the past, and not all investors have the stomach for all the turmoil.

Whether or not you should invest in cryptocurrency depends on your personal preferences and tolerance for risk. If you are willing to take more risk in exchange for higher potential income, cryptocurrency may be the right investment for you. But if you’d rather avoid risk and volatility, there are plenty of other options.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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