1. High Volatility: Cryptocurrency prices are extremely volatile and can swing dramatically in a short period of time, making it difficult for investors to predict.
2. Lack of Regulation: Cryptocurrencies are not regulated by any government or institution, leaving investors vulnerable to fraudulent activities.
3. Security Risks: Investors are increasingly vulnerable to cyber-attacks and hacks, as cryptocurrency transactions are secure but exchanges may not be.
4. Digital Asset Risk: Since cryptocurrencies exist solely in digital form, they could potentially be hacked or stolen by malicious actors.
5. Tax Risk: Cryptocurrency taxes are complex and vary by jurisdiction. Investors must be aware of their local tax regulations to ensure they are not liable for taxes they do not owe.