Better Buy: Beaten-Down Growth Stocks or Bargain Bitcoin?

As stock prices slide, it can be a smart opportunity for investors to load up on quality investments at a discount.

Growth stocks — particularly tech stocks — have been hit especially hard in this downturn, with the Nasdaq falling nearly 32% from its peak earlier this year. The crypto market has also taken a beating, and Bitcoin (BTC -4.19% is down close to 70% from its high in November.

If you’re looking for a bargain, beaten-down growth stocks and crypto are some of the most affordable investments right now. But which one is right for you?

Balancing risk and reward

The right investment for you will largely depend on your tolerance for risk. Stocks, in general, are inherently less risky than cryptocurrency. This is because, unlike Bitcoin, stocks have a long history of recovering from downturns.

Bitcoin was established in 2009, so this is the first real bear market it’s experienced (save for the brief market crash in March 2020). While Bitcoin is the largest cryptocurrency and does have a better chance of recovering from downturns, nobody knows for certain how it will fare over the long term.

Of course, not every single growth stock will recover from this bear market, either. But stocks are less speculative than cryptocurrency, which also means they’re not quite as risky.

Risk is only one part of the equation, however. If Bitcoin does survive this downturn, it could be a potentially lucrative investment. Its price is currently at an 18-month low, down to around $20,000 from its peak or close to $70,000 per token. If Bitcoin rebounds, you could stand to make a lot of money.

Which investment is right for you?

As you’re deciding whether to buy stocks or Bitcoin, think about how much risk you can tolerate for the potential of seeing lucrative returns.

If you’re willing to take on more risk for the chance to earn higher returns, Bitcoin may be the right option for you. There are no guarantees that cryptocurrency will thrive over the long term, so there’s always a chance you could lose the money you invest. But if that’s a worthwhile trade-off for the potentially substantial returns, it may be a good fit for your portfolio.

On the other hand, if you’re more risk-averse and would prefer an investment with a little more stability, stocks may be the better option. Again, not every single growth stock will be a good investment. But if you do your research and choose companies with healthy fundamentals, your money will be much safer.

How to protect your money

Regardless of where you invest, it’s important to have the right strategy.

If you opt to invest in Bitcoin, only invest money you can realistically afford to lose. Also, be prepared for more volatility. Cryptocurrency is famous for its ups and downs, and there’s a good chance we haven’t seen the worst of this downturn yet. If prices continue to fall, try your best to keep a long-term outlook and avoid getting caught up in the day-to-day fluctuations.

If you choose to buy stocks, be sure to do your homework before you buy. Not all stocks are created equal, and shaky companies are less likely to rebound. By investing in strong companies, though, there’s a much better chance your stocks will thrive.

Market downturns can be a difficult time to invest, but they’re also one of the most affordable times to buy. Bitcoin and growth stocks can be smart options for the right investor, and by weighing the pros and cons of each investment, it will be easier to decide which one is right for you.

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