Should you invest in cryptocurrency in 2021? | Smart change: personal finance
No matter how popular cryptocurrencies are among investors, they cannot be successful in the long run if they are not widely accepted by traders.
Cryptocurrencies can also be incredibly volatile, which adds to their risk. Bitcoin, for example, has lost over 80% of its value in the past, and it has seen several big drops in recent months.
Volatility isn’t always a bad thing, but it can be hard to digest as an investor. If you are the risk averse type, investing in cryptocurrency right now could lead to many sleepless nights.
There are also risks associated with owning cryptocurrency itself. Buying cryptocurrency directly involves buying coins through a crypto exchange – not a traditional exchange. You’ll also need a digital wallet to store your coins, which can be a security risk if you’re not careful. Wallets can be hacked and if you lose your password you have no way to access your investments.
Is Cryptocurrency Right For You?
Whether or not cryptocurrency is a smart investment for you will depend on your risk tolerance and your investing style.
Think about how you would react if your crypto investments were to drop 20% overnight. What if they were down 50%? And 80%? If you know you are losing sleep or panicking your investments in any of these scenarios, cryptocurrencies may not be the best fit for your investing style.