1. Volatility Risk: Cryptocurrencies are known for their extreme volatility and their prices can swing dramatically within a short period of time, which can cause losses for investors.
2. Regulatory Risk: Cryptocurrency regulations are always changing, so investors must be aware of how regulation can affect their investments.
3. Security Risk: Cryptocurrency exchanges are vulnerable to hacking and other security threats, which can lead to investors losing their funds.
4. Liquidity Risk: Cryptocurrencies may not be widely accepted or traded on many traditional exchanges, making them less liquid and harder to convert into cash.
5. Fraud Risk: There are a number of fraudulent cryptocurrency schemes that promise high returns with little risk, which can be attractive to naive investors.