As a new technology, cryptocurrency trading may be more unstable than traditional forms of investing. Calculating any potential return on investment is very unpredictable. For this reason, many people are wary to deal with cryptocurrencies. In fact, finance experts say that cryptocurrency holdings should not make up more than 5% of any investment portfolio.
In addition, because cryptocurrency transactions are not consistently regulated, there remains a risk of government interference in the future. While it is a primary reason that many people invest in cryptocurrencies in the first place, the lack of a centralized authority can also pose a legal and financial risk to cryptocurrency owners. For example, cryptocurrency coins are not FDIC-insured or protected by any other federal regulation.
Lastly, tax stipulations on cryptocurrencies are constantly evolving, making investment in these assets a headache for many investors.