While stocks are volatile, cryptocurrencies are ridiculously volatile. Such volatility makes cryptocurrencies unsuitable for short-term investors. Even though cryptocurrency is risky, even riskier than stocks, that doesn't mean you should stay away from them. However, what you should do is invest with caution.
Cryptocurrency is significantly more volatile than stocks, although investment returns for either option are never guaranteed. If you're intrigued to invest in cryptocurrency, it may be worthwhile to allocate some investment funds for it if you have extra money after funding your retirement accounts, which minimizes debt and ensures that your emergency fund is abundant. Cryptocurrencies are high-risk assets that could also have explosive rewards, but they cannot be counted on. Stocks and cryptocurrencies are drastically different investment assets.
While both are generally liquid assets that belong to the speculative side of your portfolio, the similarities end there. These are very different types of securities and belong to very different parts of your portfolio. Here is a summary of these two types of values. A financial advisor can help you decide if one or both are right for your portfolio.
The roller coaster of stock values can be dizzying, but not as wild as the ups and downs of cryptocurrencies. The absence of a clearing house function in cryptocurrency means that people who want to trade currencies must find each other on an ad hoc basis. Whether you bought Bitcoin or an altcoin (slang for literally every other asset in the cryptocurrency market), cryptocurrencies are a rollercoaster ride. In addition, it's a good idea to have a diversified portfolio that includes stocks, bonds, and some cryptocurrencies.
There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. Cryptocurrency dominates much of the conversation among those new to investing, which could put them at risk of neglecting the tried and true world of long-term wealth building actions. Cryptocurrencies and stocks are valid investment options, but they serve different purposes in a portfolio. Most said they only have a limited or moderate understanding of cryptocurrencies, despite putting money in different currencies.
However, when considering cryptocurrencies, it's important to assess your overall portfolio goals and risk tolerance. The benefit of diversifying your portfolio with cryptocurrencies is that, if the value of the cryptocurrency skyrockets, the 5% who invest in it will see high returns and could dramatically increase the value of your overall portfolio. Instead, a network of hundreds (if not thousands) of independent companies run their own small exchanges where individuals exchange cryptocurrencies with each other. Cryptocurrencies are open source, peer-to-peer digital currencies that are not controlled by a central financial authority.
On the contrary, cryptocurrencies remain largely unregulated, which, for some cryptocurrency investors, is a trademark in favor of cryptocurrencies.