Take a close look at this chart; you can see the volatility in the value of the cryptocurrencies. There has never been a predictable and reasonable trend in the rise and fall of the BTC and other cryptocurrencies as well. On top of all this, there has almost always been a negative and a fearful air surrounding them.
There has never been a widespread acceptance and common usage encouraged by any government in a regulated manner so far. Most governments have been apprehensive about the scope of malicious activity that can be seamlessly funded due to the secretive nature of these cryptocurrencies
Lack of Metrics to Value Them
There has never been a proper metric system to value the cryptocurrencies. No balance sheet, no publicly traded stock data, no company info and no dependable source to understand the currency. Blindly trusting the blockchain network without an accurate analysis is a wrong investment decision.
With most countries and banks being against the idea of widespread usage of cryptocurrencies, there haven’t been strict and lawful regulations around the cryptocurrencies. In few cases wherein there have been regulations, the buyers incur heavy charges and taxes which is an obvious downside.
No Scope for Diversification
There have been only a few cryptocurrencies that have been widely discussed and debated about. Though the number of cryptocurrencies is skyrocketing, only 0.5-1% of them are performing well leaving almost no room for diversification.
Not Genuinely Scalable (yet)
With most banks and nations declining to accept the usage of these currencies, there has been a grave issue of scalability. There is a small ray of hope that at least a few banks and countries might someday in the future accept these, until then, there is nearly zero scalability for the cryptocurrency.
Too Many Players
There are nearly 1500-1600 cryptocurrency coins one can invest in. With these many options, there can be a cut-throat competition shortly. Though presently, only a fraction of these coins are valuable, with deals like this, there will be a very fierce competition which in turn might turn the whole investment into an unpredictable game.
Crowded with Retail Investors
Institutional investors always back down from investing in assets which have little to no scope for valuation and analysis. Therefore, that leaves only emotion driven retail investors in the market for the cryptocurrency. A market with emotion driver investors is never a safe bet, and one cannot bank on the long-term benefits in such cases.
With the IRS regulation to declare these cryptocurrencies as property, they must be now reported as capital gains or losses. With many people invading these taxes and not declaring these coins, the governments have become very strict and are imposing heavy fine, punishments and jail time too.
Very Weak Protection against Fraud
In the present times, with banks, governments and other major businesses showing a strong disinterest towards regulating, buying, investing or purchasing these coins, there is an increased risk for fraud and the protection against fraud is again weak, as everyone is turning their backs behind.
––Davenport Laroche, Container Investing Solution headquartered in Hong Kong