To say that crypto has had a tough year would be the understatement of the century.
This year has been setback after setback for the crypto world. Prices have been consistently declining since late 2021, and the Terra Luna blowup earlier this year caused many people to question crypto's future. Now, after the FTX implosion, investors are even more skeptical.
If you're hesitant to invest in cryptocurrency right now, that's reasonable. Even some of the experts are rattled by the events over the past year.
However, with crypto prices at historic lows, it could also be an extraordinary buying opportunity. So is it the right time to invest in Bitcoin (BTC 0.01%)? Here's what you need to know.
Is crypto safe right now?
Crypto is an inherently risky investment, and it always has been. It's still speculative right now, so there are no guarantees that it will thrive over the long term.
If you're thinking about investing in Bitcoin -- or any other cryptocurrency -- be sure you have a higher tolerance for risk. Only invest money you can realistically afford to lose, and double-check that the rest of your portfolio is well diversified to limit your risk.
While events like the FTX meltdown can be unnerving, keep in mind that these types of incidents don't necessarily make crypto riskier. FTX was not so much a crypto issue as it was a business leader making poor decisions, and that can happen in any industry (take the downfall of Theranos, for example).
There will always be a certain degree of risk with crypto, and not all investors will be comfortable with that -- especially in the wake of the FTX scandal. But if prices rebound even slightly, you could potentially make a lot of money.
Will Bitcoin bounce back from this slump?
To be clear, nobody knows what the future holds for crypto. But Bitcoin is in a better position than many other cryptocurrencies simply because it's the biggest and most popular in the industry.
Bitcoin currently has a market cap of around $318 billion -- making up more than one-third of the $822 billion crypto market as a whole. Its sheer size gives it a major advantage, and if there's any cryptocurrency to stick around over time, it's more likely to be Bitcoin.
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It's also more popular among large institutional investors. As more investors grow skeptical of smaller altcoins, those who do continue with crypto may feel safer parking their money with a giant like Bitcoin. Institutional investors are a large part of the reason why Bitcoin hasn't been hit as hard as some other cryptos, and they could also be the key to long-term growth.
Bitcoin does have its flaws, however. Its energy consumption and slow transaction times are still holding it back, for example, and whether it will be a strong hedge against inflation is debatable. Bitcoin isn't perfect, and it's important to understand these risks before you buy.
That said, Bitcoin's price is the lowest it's been in years. It's currently priced at around $16,500 per token, down from its all-time high of nearly $70,000 per token last year. If you've been waiting for a more affordable time to invest in crypto, now may be your best chance.
Should you invest right now?
Nobody -- even the experts -- can say exactly how crypto will fare over the coming years. There is always a chance that your investment may not pull through, and you could lose money.
However, there is also a chance that the potential rewards outweigh the risk. If you had invested $1,000 in Bitcoin five years ago, you would have more than $2,100 right now. In other words, despite all the hardships crypto has been through (and the fact that Bitcoin is currently down more than 75% from its peak), you still would have more than doubled your money.
Again, there are no guarantees that Bitcoin will thrive over time. But if its price rebounds -- even if it doesn't surpass its all-time high anytime soon -- you could stand to make a lot of money by investing now.
