2 Reasons to Invest in Crypto Right Now — and 2 Reasons to Wait | The Motley Fool

As crypto prices continue to tumble, many investors may be asking themselves whether it’s still worth it to invest.

Even those with nerves of steel may be feeling unsettled during this crypto crash, and it can be challenging to stay optimistic right now. While there are a few good reasons to continue investing in cryptocurrency, there are also reasons to consider holding off for now.

Why it could pay to continue investing

1. Prices are lower than they’ve been in a long time

Market downturns are one of the most affordable times to invest, as prices are significantly lower than they have been over the last few months. Bitcoin (BTC 1.08%), for instance, is down close to 70% — from its peak of nearly $70,000 per token in November to roughly $20,000 right now.

If you’ve been waiting for crypto to become more affordable, this might be your best opportunity. Even if you’re on the fence about investing, if there’s even a slight chance you might want to buy at some point, now could be a great chance to invest at a discount.

2. A market rebound could result in substantial earnings

To be clear, nobody knows for certain what the future holds for crypto. Even if it recovers from this downturn, there are no guarantees that it will thrive over the long term.

That said, by investing now when prices are lower, you could see substantial returns if crypto rebounds.

Historically, crypto prices have seen positive average returns over time, despite experiencing severe volatility. For example, Bitcoin has earned returns of more than 660% over the last five years, even though it’s faced multiple major downturns during that time.

Again, there are no guarantees crypto will perform well over time. But this type of investment has a long history of extreme ups and downs. If it does bounce back, you could potentially see significant gains.

Why it may be better to wait

1. You can’t afford to invest right now

Market downturns can be tough for many investors financially. Not everyone has spare cash right now, especially to invest in something as risky as crypto.

If you don’t have an emergency fund with at least six months’ worth of savings, it’s best to focus your efforts there before investing in crypto. Similarly, if you’re living paycheck to paycheck or struggling to pay the bills, those areas should be your first priority before investing.

2. You’re a risk-averse investor

Cryptocurrency could potentially be a lucrative investment, but it’s also highly speculative. Even big names like Bitcoin and Ethereum (ETH 4.05%) aren’t promised to succeed over the long run, which makes crypto a risky investment.

Before you invest, think about how much risk you can comfortably tolerate. Volatility is normal for this type of investment, and it’s not unusual for crypto prices to fall by 80% or more. (Case in point: Back in 2018, Ethereum lost close to 95% of its value before it managed to rebound.)

Crypto won’t be the right fit for every investor, and that’s OK. If you’re uncomfortable taking on higher levels of risk or know you’d lose sleep if your investments experience extreme volatility, it may be best to stick to investing in stocks for now.

The crypto market has been on a roller-coaster over the last couple of years, and downturns like these can be difficult to stomach — but they can also be fantastic buying opportunities. By considering your tolerance for risk and overall financial situation, it can be easier to decide whether crypto is right for you.