Cryptocurrency prices are sinking to new lows. The price of Bitcoin (CRYPTO: BTC) recently fell to roughly $33,000 per token -- less than half of its all-time high of approximately $69,000 per token back in November.
It's not just Bitcoin, either. Ethereum (CRYPTO: ETH) is currently priced at around $2,200 per token, down from its record high of around $3,900 two months ago. In fact, the entire crypto market has shed nearly half its value over the last two months, with its market cap plummeting from nearly $3 trillion to just over $1.5 trillion.
If you've considered investing in cryptocurrency in the past, it may seem like it's too late to buy now that prices have fallen so significantly. However, right now could actually be the best time to invest. Here's why.
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Should you invest in crypto right now?
Market downturns can be intimidating, especially when they're as severe as the recent crypto crash. That said, they can also be a smart buying opportunity because prices are lower.
The price of Bitcoin is down more than 46% since mid-November. Ethereum is down more than 47% in the same time period. And Solana (CRYPTO: SOL) -- one of the fastest-growing cryptocurrencies of 2021 -- has plummeted by close to 60% over the last two months. While these numbers can be daunting, it also means the crypto market is essentially on sale right now.
If you've been on the fence about investing in crypto, now is one of the most affordable times to buy.
Also, while nobody knows for certain what the future holds for cryptocurrency, there's reason to believe prices will bounce back eventually. Investors are facing a period of economic uncertainty right now, especially after the Federal Reserve announced it will raise interest rates this year. As a result, many investors are moving away from riskier assets like crypto.
However, this uncertainty won't last forever. Eventually, investors will be willing to take on more risk, and when that happens, it's likely that cryptocurrency will boom once again. If you invest now when prices are at their lowest, you'll reap the rewards during the rebound.
Is crypto right for you?
Right now may be a fantastic investing opportunity, but before you rush into buying cryptocurrency, it's important to make sure it's the right investment for you.
Crypto is higher risk than most stocks, simply because it's speculative. Although major players like Bitcoin and Ethereum are gaining more real-world utility, they still have a long way to go before they're widely adopted. If you're a risk-averse investor, consider whether you're comfortable with the fact that you could potentially lose your entire investment if cryptocurrency fails.
In addition, think about how much volatility you can stomach. As the last two months have proven, crypto prices can fall on a dime -- and when they fall, they fall hard. Even the largest and most stable cryptocurrencies are subject to extreme volatility, so be sure you know what you're getting into before you buy.
Finally, be prepared to hold your investments for the long term if you choose to buy. While there is a good chance the crypto market will recover from this downturn, nobody knows how long that could take.
If you're prepared to hold your investments for years despite short-term volatility, crypto could be the right investment for you. By buying now when prices are lower, you could reap the rewards down the road.
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Katie Brockman owns Bitcoin and Ethereum. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
