Is it really safe to invest in crypto right now?

Crypto has made a comeback recently, with prices of major cryptocurrencies such as Bitcoin (BTC -2.35%) and Ethereum (ETH -2.51%) hovering. After experiencing a long crypto winter, many investors are relieved to see positive momentum in the market.

But others are skeptical that this comeback will last. Famous for its volatility, the crypto sector has proven that it can crash just as quickly as it can climb.

As prices continue to rise, it can be a tempting time to buy. But is it really safe to invest right now? Here’s what you need to know.

The future looks promising – for now

There are countless reasons why crypto is climbing right now.

Part of this growth may be related to the fact that Ethereum recently set a date for its latest update, “The Merge”, which will help move it from a proof of work (PoW) protocol to proof of stake (PoS ). This is promising news for investors, as a PoS protocol will result in significantly faster transactions, lower costs and a more energy efficient network.

Cardano (ADA -7.28%) is also working on its own upgrade, the Vasil hard fork, which will bring a number of improvements to the blockchain. The release is currently scheduled for the end of July, and the excitement surrounding the upgrade could help fuel investor optimism – and result in higher crypto prices.

However, that does not necessarily mean that the worst is over. Many Americans are bracing for a recession, and tough economic times can sometimes spell trouble for riskier assets like crypto. If stock prices take a turn for the worse, crypto could also be hit hard.

Also, as a generally volatile investment, it is safe to say that crypto will experience more turbulence in the future. When a downturn will happen or how severe it might be is anyone’s guess, but volatility is a normal occurrence when it comes to crypto.

Is it safe to invest right now?

Whether prices are rising or falling, it’s not necessarily a bad time to invest in crypto.

It can be scary to invest when prices are lower, but it’s also the perfect opportunity to invest at a discount. Crypto is an expensive investment, and buying during a downturn can save you a lot of money. Buying when prices are rising will cost you more, but it can also be less nerve-wracking than investing in a recession.

The best way to gauge whether it is the right time to invest is to assess your financial situation and risk tolerance.

Money is tight right now for many investors, and not everyone can afford to invest in something as risky as crypto. If you don’t have any emergency savings, it’s best to focus on that goal first. It’s also a good idea to double-check that the rest of your portfolio is properly diversified, in case your crypto investments don’t pan out.

Then think about how much risk you can tolerate. Crypto is still speculative right now, and this latest price spike doesn’t necessarily mean it will succeed over time. We are likely to see more volatility in the future and it is wise to invest in crypto only if you are comfortable with high levels of risk.

Crypto prices may be on the rise, but it’s still important to invest carefully. It is not the right investment for everyone, and by assessing your overall tolerance for risk and volatility, it will be easier to decide whether it is right for you.