Return and risk are two of the most important concepts to understand before investing in crypto.

What is return

Return is the change in your investment over time, expressed as a percentage. For example, if you invest $100 and a month later you have $105, your monthly return is 5%.

What is risk

Risk refers to how much an asset's returns fluctuate. If your returns can change significantly in a short period, and even turn negative, the asset carries high risk.

Bitcoin (BTC), Ethereum (ETH), and most crypto assets offer high potential returns, but they also carry risk. A negative return over a few days doesn't mean you made a bad investment. That's the nature of these assets, and your investment can still grow over time even if your returns fluctuate a lot from day to day.

The higher an asset's expected return, the more its price can move in either direction. That's why crypto is generally considered a higher-risk, higher-return investment compared to options that offer smaller, steadier returns.

Understanding both concepts helps you set realistic expectations and choose investments that match how much risk you're comfortable taking.