The year 2022 has been a rollercoaster ride for the Crypto industry. This year has seen a significant drop in the prices of Bitcoin, one of the largest Crypto; the Terra Luna crash also happened, along with the Indian government introducing new Crypto-tax regulations for investors and traders. With all these downfalls, the industry was coping somehow, but the FTX crash worsened the situation, and everyone’s confidence in Crypto has been shaken up.

In this blog, let’s see what significant lessons can Indian Crypto investors learn from this FTX downfall.

Should Indian investors worry about this crash?

The downfall of one of the biggest Crypto organizations has definitely been an alarming call for everyone, including small-big investors, traders, and potential investors.

Industry watchers have observed that Indian Crypto investors have taken a step back and are in a wait-and-watch mode. The investors believe that the best way possible is to avoid taking any additional positions.

Some industry leaders expressed that the industry is already amidst the bear market, and such downfalls can develop an intense worrying situation for investors. Seeing the volatility of the Crypto market, there’s a possibility that small-scale investors might take a step back and become inactive for a while; on the other hand, long-term/ seasoned investors might take this as an opportunity to capitalize on digital assets at discounted prices and hedge their investments later.

Let’s quickly read about the lessons that Indian Crypto investors can take into consideration looking at the current situation of the Crypto market.

Important lessons for Indian Crypto investors to learn

#1 Before holding Crypto on any platform, consider its potential risks

The FTX collapse has raised a question for investors regarding the platform. Now, they will be more cautious when choosing a Crypto exchange platform to hold their assets. Now, people are leaning towards storing their Crypto assets in cold storage, which also means taking them offline; this will definitely make the Cryptos less susceptible to hacks. However, taking the Cryptos off the platform will lead them to have lesser liquidity and make it difficult to trade them quickly.

#2 Having a diverse portfolio is always the safest option

If you are into investing, may it be stocks, Cryptos, or any other assets, experts always suggest that holding a single asset in large amounts can be risky. Instead, always diversify your portfolio, as it is the safest option. Let’s say you invested hugely in FTX Crypto, and whatever happened to the organization has given you a painful lesson about why having a diverse portfolio is important.

#3 From the current prevailing situation, investors can expect stricter regulations

The current turmoil in the Crypto industry has just intensified the condition of bringing strict regulations regarding digital assets. The Government of India and other governments worldwide have been planning to regulate the Crypto industry, and the FTX collapse has accelerated the process. As a result, everyone believes there’s a severe need to protect the investors and newbies planning to enter the space.

#4 You need to have a backup of all your Crypto transaction records

No matter whether you’re a newbie investor or an experienced one, keep in mind to have a backup of all your Crypto transaction records in chronological order. When the time comes to pay Crypto taxes, as the Governments are planning to make strict rules for the industry, gathering reporting documents would be one hardest part; but with a backup, you’ll be at ease.

Having a backup will also help you assess your overall profits and losses throughout the year, with which you can make smarter investment decisions.

Final thoughts

The recent incident in the Crypto space was something nobody had ever imagined. Of course, there’s a possibility that many investors and traders might have lost a little faith in Crypto, but with such incidents come a lot of experiences. And we’re sure the above-discussed lessons will help you to be a smart investor who makes better investment decisions.

Happy Trading!

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.