The cryptocurrency market has taken its toll on the world, as coins such as Bitcoin, Ether, Dogecoin, Shiba Inu, etc. have seen huge popularity among investors in the past few years. Cryptocurrency has, in all fairness, ushered in a new era for how business transacts globally – with famous personalities like Elon Musk endorsing it. However, cryptocurrencies are volatile in nature and subject to market risks. For example, the world’s largest cryptocurrency Bitcoin set a record when it touched $69,000 last year, falling below $40,000 in three months. So cryptocurrencies are categorized as risky assets, and investors should know that there are volatility associated with investing in them.
Having said that, those who want to invest in Bitcoin or cryptocurrencies in general can keep in mind a few key points while engaging in their trading. According to Kumar Gaurav, founder and CEO of Cashaa, a digital currency management platform, one of the most important things to understand is how much to invest in crypto. “You have to understand that cryptocurrency is very volatile. The market is always open and prices fluctuate depending on global supply and demand factors. Cryptocurrency as an asset is a bit more risky than other investment assets,” he says.
Speaking about similar observations, Darshan Bateja, co-founder and CEO of Fold, and a member of the Blockchain and Crypto Assets Council (BACC), offered a solution to make Bitcoin a little risk-free. He said, “Cryptocurrencies are full of volatility and speculation. If you want to invest in Bitcoin, don’t chase small gains, or get discouraged by small losses. Bitcoin is a great long-term asset if you want it, and most importantly, if you can handle it.” Occasional dips are short-term. If you don’t want to deal with volatility, the solution is to put your Bitcoin in a fixed deposit.”
Meanwhile, Gaurav highlighted the importance of choosing the right cryptocurrency project to invest in. “There are more than 11,000 crypto projects now listed on CoinMarketCap. Out of the 11,000 tokens, only a few are worth investing in. It is important for every investor to understand the project, research the team, and then consider investing in the project. They are traded as the underlying technology.”
Ketan Surana, Co-Founder and CEO of Coinsbit India, who is also a member of BACC, said in this regard that if someone is interested in Bitcoin, they should know the basics. “One should make sure to learn the basics of bitcoin as in – how it is mined; reasons; why people believe so much in this asset class. It is limited to 21 million, the last bitcoin will come in 2140, its tokens and the associated halving event.”
Echoing the sentiment, Bateja said, “Always learn before putting money in. With crypto, the learning curve is steep but of paramount importance. Learn about transactions, custody, networks, and wallets. These are the building blocks of investing in Bitcoin. That is why we are working on an educational product built into Our app is to educate users before purchasing cryptocurrency.”
However, Gaurav added that one should not fall in love with the hype often associated with a particular cryptocurrency. “It often happens that the currency rises quickly and then suddenly loses gains. You have to learn to be patient and not fall in love with the hype. Check if the asset is going up on its own or is riding a bubble.” There are situations where an influential person can move market”.
“If there is anything certain about the cryptocurrency industry, it is volatility. Factor this while making investments. It is not a given that your investment will always grow, there will be times when the asset will see a drop. Keep this possibility in mind when entering the industry.”
Experts also emphasized the importance of finding a secure crypto wallet, as the asset is vulnerable to fraud. “Always make sure to buy Bitcoins from a reputable crypto-asset exchange so that your funds whether it is Fiat or Cryptoassets are always secured and can be deposited; withdraw or transfer any other assets seamlessly,” said Ketan Sorana.
“Some of the best options are wallets that also link to exchanges, allowing you to store and trade your crypto assets from the same location,” Gaurav added.
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