Should you really be investing in crypto right now?

The crypto market is no stranger to volatility, but the past year has been particularly tough. Despite a small rally over the past few weeks, the major cryptocurrencies are still significantly down from their all-time highs.

The price of Ethereum (ETH -0.85%)for example, is down about 66% since its peak in November. Bitcoin (BTC 2.26%) is down more than 71% from its high, and Solana (SUN 6.49%) has fallen by as much as 86%.

With some investors worried that a market crash could be on the way, is now really the right time to invest in crypto? It depends on.

Should you stop investing for now?

In some cases, hitting pause on investing can be a smart move – especially if money is tight.

Market declines are one of the worst opportunities to sell your investments because prices are significantly lower. If you first invested in crypto months ago and are selling now, you would be selling at a huge discount and locking in those losses.

No one knows exactly where crypto is headed in the coming months. However, if you cannot afford to leave your money invested for at least a year or two, it may be best to avoid investing for now. If crypto prices keep falling and you suddenly realize you need that money, selling your investments can be costly.

The case for continuing to invest

If you have a solid stash of savings and can afford to keep investing, right now could actually be a fantastic buying opportunity.

Cryptocurrency is a notoriously expensive investment, and buying right now means you have the chance to invest at a fraction of the cost. Bitcoin, for example, cost nearly $70,000 per token at its peak, and it is currently priced at around $21,000 per token. And Ethereum, which hit an all-time high of about $4,800 per token, now costs around $1,700 per token.

However, the key is to keep your investments for the long term. Crypto can be extremely volatile and trying to buy and sell at just the right moment by timing the market is nearly impossible.

If you stay invested for years, you can potentially make a lot of money. For example, if you had first invested in Ethereum three years ago, you would have seen returns of more than 800% since then – and that is despite the several major downturns it has experienced during that time.

Ethereum price data by YCharts

There are no guarantees that any cryptocurrency will succeed over time. But keeping your investments for the long term is one of the most effective ways to keep your money safer.

Is cryptocurrency right for you?

Crypto can be a fantastic long-term investment, but it’s not right for everyone. Whether it belongs in your portfolio will largely depend on your financial situation and risk tolerance.

Before investing, double check that your finances are stable and that you have a healthy emergency fund. That way, if crypto prices fall, it will be easier to keep your money in the market until it recovers.

Also consider how much risk you are willing to tolerate. Crypto can potentially be a lucrative investment, but it is still speculative right now. If successful, you can stand to make a lot of money. But if it fails, you can lose your entire investment. Before you buy, think about whether it’s a risk you’re willing to take.

There is no right or wrong answer as to whether buying crypto is a smart idea as it will depend on your unique situation. But weighing the pros and cons can make it easier to decide if it’s right for you.