Now could be either a great or terrible time to invest in crypto.
It's no secret that the last year has been rough for crypto.
Bitcoin (BTC -1.77%) and Ethereum (ETH -8.43%) are both down roughly 70% from their peaks, and Cardano and Solana have plummeted by around 90%. Those numbers are tough to stomach, and many investors have fled the crypto market in recent months.
If you're nervous about the market right now, you're not alone. But should you keep investing? There are three reasons to stick with crypto in 2023, and one reason you're better off avoiding it for now.
Why now could be a smart buying opportunity
1. Prices are at rock bottom
At its peak, Bitcoin cost nearly $70,000 per token, and Ethereum was priced at close to $5,000 per token. Today, Bitcoin stands at just under $21,000, with Ethereum at roughly $1,500.
If you've been looking for a more affordable time to invest in crypto, you may not get a better chance than right now. The crypto market is essentially on clearance at the moment, and it's possible to load up on quality investments for a fraction of the price.
2. The upswing could be lucrative
Of course, nobody knows for certain whether the crypto market will recover. However, downturns like this aren't necessarily uncommon in this industry, and major cryptocurrencies have faced worse in the past.
For example, back in 2018, Ethereum's price fell by nearly 95% over the course of the year. If you had invested at its lowest point, you would have seen returns of nearly 4,500% over the following three years alone.
Ethereum Price data by YCharts
Again, it's unclear what the future holds for crypto, and we may not see another rally similar to the 2020-2021 surge. But even if cryptocurrencies don't reach their all-time highs again anytime soon, even a relatively small upswing could still be lucrative if you invest at rock-bottom prices.
3. You might regret not investing
Crypto is a speculative investment, so nobody -- even the experts -- knows how it will fare over the long term. While it could fail, it could also change the world.
When you're deciding whether to invest, consider which of these options you'd regret more: investing now and losing money if crypto fails, or not investing and missing out on the investment of a lifetime if crypto succeeds.
To be clear, this doesn't mean you should go all-in and invest every dollar you have in crypto. As with any investment, it's important to buy wisely and only invest what you can afford. But for some people, it's worth risking a little money to avoid the regret of not taking this chance.
Why it may be best to avoid crypto
1. You're a risk-averse investor
For all its potential, crypto also carries a significant amount of risk. At the moment, it's impossible to know whether crypto will succeed, and there's always a chance that you could lose whatever you invest. If money is tight, now may not be the best time to buy.
Also, this investment is notorious for its extreme volatility. Even in good times, it can experience nauseating ups and downs. Not all investors have the stomach for crypto, and that's OK. If you know you'd lose sleep over that level of volatility, you might be better off sticking to stocks for now.
The future of crypto is uncertain, and whether you choose to invest now will depend largely on your risk tolerance and personal preferences. But if a rebound is on the way, right now may be one of the best chances to buy.
Katie Brockman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
FAQs
While the future is unpredictable, some factors point towards 2024 being a better year for digital assets than 2023, which was already a strong year compared to the bear market in the year prior.
Would you invest in cryptocurrency Why or why not? ›
There are several risks associated with investing in cryptocurrency: loss of capital, government regulations, fraud and hacks. Loss of capital. Mark Hastings, partner at Quillon Law, warns that investors must tread carefully in crypto's unique financial environment or risk significant losses.
What are the pros and cons of investing in crypto? ›
The advantages of cryptocurrencies include cheaper and faster money transfers and decentralized systems that do not collapse at a single point of failure. The disadvantages of cryptocurrencies include their price volatility, high energy consumption for mining activities, and use in criminal activities.
What is going to happen to crypto in 2023? ›
The year 2023 gave a fresh start to the crypto world, showing positive signs of recovery. Crypto investors believe that in situations like this, investing in stable digital currencies like Bitcoin and Ethereum in SIP format is a safe choice.
Is it still a good time to invest in crypto? ›
Despite its price hovering just off all-time highs, there are several reasons why it's still a good time to invest in Bitcoin in 2024. In the short term, recent developments have further solidified Bitcoin's position in the financial world.
Is crypto safe in 2023? ›
The year 2023 was one of the best years in the history of cryptocurrencies, as blue chip crypto tokens Bitcoin and Ethereum delivered their investors returns of over 155% and 90%, respectively. Meanwhile, the prices of some crypto coins (top 100 by market cap) increased by up to 9600% in 2023.
What is the biggest problem with crypto? ›
Cryptocurrency payments do not come with legal protections.
For example, if you need to dispute a purchase, your credit card company has a process to help you get your money back. Cryptocurrencies typically do not come with any such protections.
Is crypto safer than banks? ›
Cryptocurrencies offer decentralized security, privacy, and potential for high returns, but they come with volatility and regulatory risks. Banks provide regulatory oversight, insurance, and fraud protection but can be vulnerable to centralized control and offer less privacy.
Why is crypto better than stocks? ›
Stocks can generally offer more stable returns, but crypto can potentially offer higher gains. What's your timeline? Crypto's price fluctuations might help you make money much more quickly than the stock market's longer horizons, but can also lead to significant short-term losses.
What is the biggest risk in crypto? ›
Scammers and hackers
Cryptocurrency holders and users are also often targeted by scammers and tricksters. It is especially important to be wary of fake websites and phishing emails that pretend to be from reputable sources—no reputable crypto asset issuer or service provider will ask for your private keys or passwords.
Losing market perception reduces the demand for a cryptocurrency and drives its value down. If you ever asked yourself, “why is crypto going down?” or wondered why some tokens crash (its value fell to zero or near-zero), a loss of market perception is often to blame.
What are the advantages and disadvantages of blockchain? ›
The main advantages of the Blockchain technology are decentralized network, transparency, trusty chain, unalterable and indestructible technology. In turn, the main disadvantages of the Blockchain are the high energy dependence, the difficult process of integration and the implementation's high costs.
Is crypto safe to invest in? ›
Cryptocurrency is a safe investment or not? Like any other investment, cryptocurrency is not a risk-free investment. The market risks, cybersecurity risks and regulatory risks, as cryptocurrency is not issued or regulated by any central government authority in India.
Is crypto trading worth in 2023? ›
Weekly market cap of all cryptocurrencies combined up to July 2024. It is estimated that the cumulative market cap of cryptocurrencies increased in early 2023 after the downfall in November 2022 due to FTX. That value declined in the summer of 2023, however, as international uncertainty grew over a potential recession.
Is Bitcoin a good investment in 2023? ›
That may seem like an extreme move to the typical stock investor. But bitcoin has a long track record of extreme volatility. In 2023 alone, bitcoin prices surged to nearly 156%. If the crypto maintains its historical volatility, $100,000 may be closer than it seems.
Which crypto is best to rise in 2023? ›
Top 10 cryptocurrencies in 2023 by market capitalisation
- TRON (TRX)
- Solana (SOL)
- Cardano (ADA)
- Dogecoin (DOGE)
- U.S. Dollar Coin (USDC)
- XRP (XRP)
- Binance Coin (BNB)
- Tether (USDT)
If this pattern continues into 2030, the price could peak around 2029 or 2030, potentially aligning with Wood's price prediction. If Wood is correct and Bitcoin reaches $3.8 million, a $100 investment in Bitcoin today would be worth $5,510 in 2030. This translates to a compounded annual growth rate (CAGR) of over 95%.
Is crypto still a good investment in 2024? ›
Established titans like Bitcoin and Ether are going to be portfolio mainstays. But rising stars like Solana and Injective are also vying for a piece of the digital future. Prepare yourself, as 2024 promises to be a profitable year for crypto investors.
