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What are the risks of trading crypto?


Dramatic gains are possible, but so are devastating losses, and investors should understand crypto’s wide-ranging risks. Here’s an overview of crypto volatility risk, technology risks, regulatory uncertainty and other issues that could affect the value of your investment.

Price volatility

Cryptocurrency prices can fluctuate wildly from week to week, or even within a single day. On May 19, 2021, for example, bitcoin’s price dropped 30%, after the Chinese government cracked down on bitcoin mining and trading.

Crypto prices may also rise and fall based on diverse factors such as changing public sentiment, world news, mainstream adoption, protocol upgrades, impending regulation, hacks, scams and more. Plus, crypto is still a relatively new asset class, and the market is still in the process of price discovery.

Technology risks

Cryptocurrencies’ underlying blockchain technology is built with numerous security…

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